Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-42172
Calumet, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
36-5098520
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification Number)
1060 N Capitol Ave, Suite 6-401
Indianapolis, IN
46204
(Address of Principal Executive Offices)
(Zip Code)
(317) 328-5660
(Registrant’s Telephone Number, Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
The aggregate market value of the common units held by non-affiliates of the registrant was approximately $1.0 billion on June 28, 2024, based on
$16.05 per unit, the closing price of the common units as reported on the Nasdaq Global Select Market on such date.
On February 28, 2025, there were 86,207,118 common shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
Title of Each Class
Trading symbol(s)
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
CLMT
The Nasdaq Stock Market LLC
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller Reporting Company
☐
Emerging growth company
☐
Table of Contents
1
CALUMET, INC.
FORM 10-K — 2024 ANNUAL REPORT
Table of Contents
Page
PART I
Items 1 and 2. Business and Properties
5
Item 1A.
Risk Factors
28
Item 1B.
Unresolved Staff Comments
48
Item 1C.
Cybersecurity
48
Item 3.
Legal Proceedings
49
Item 4.
Mine Safety Disclosures
49
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
50
Item 6.
[Reserved]
50
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
51
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
72
Item 8.
Financial Statements and Supplementary Data
75
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
133
Item 9A.
Controls and Procedures
133
Item 9B.
Other Information
135
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
135
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
136
Item 11.
Executive and Director Compensation
137
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
137
Item 13.
Certain Relationships and Related Transactions and Director Independence
137
Item 14.
Principal Accounting Fees and Services
138
PART IV
Item 15.
Exhibits
139
Item 16.
Form 10-K Summary
144
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2
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) includes certain “forward-looking statements.” These
statements can be identified by the use of forward-looking terminology including “will,” “may,” “intend,” “believe,”
“expect,” “outlook,” “anticipate,” “estimate,” “continue,” “plan,” “should,” “could,” “would,” or other similar words. The
statements regarding (i) demand for finished products in markets we serve; (ii) estimated capital expenditures as a result of
required audits or required operational changes or other environmental and regulatory liabilities; (iii) our anticipated levels
of, use and effectiveness of derivatives to mitigate our exposure to crude oil price changes, natural gas price changes and
fuel products price changes; (iv) estimated costs of complying with the U.S. Environmental Protection Agency’s (“EPA”)
Renewable Fuel Standard (“RFS”), including the prices paid for Renewable Identification Numbers (“RINs”) and the
amount of RINs we may be required to purchase in any given compliance year, and the outcome of any litigation
concerning our existing small refinery exemption (“SRE”) petitions; (v) our ability to meet our financial commitments,
debt service obligations, debt instrument covenants, contingencies and anticipated capital expenditures; (vi) our access to
capital to fund capital expenditures and our working capital needs and our ability to obtain debt or equity financing on
satisfactory terms; (vii) our access to inventory financing under our supply and offtake agreements; (viii) the effect, impact,
potential duration or other implications of supply chain disruptions and global energy shortages on our business and
operations; (ix) general economic and political conditions, including inflationary pressures, instability in financial
institutions, the prospect of a shutdown of the U.S. federal government, general economic slowdown or a recession,
political tensions, conflicts and war (such as the ongoing conflicts in Ukraine and the Middle East and their regional and
global ramifications); (x) the future effectiveness of our enterprise resource planning system to further enhance operating
efficiencies and provide more effective management of our business operations; (xi) our expectation regarding our business
outlook with respect to the Montana Renewables business; (xii) the expected benefits of the Conversion (as defined herein)
to us and our stockholders; (xiii) our expectations regarding the funding of the second tranche under the DOE Facility (as
defined herein) and the intended use of borrowings under such facility; and (xiv) our expectation that the DOE Facility will
enable MRL (as defined herein) to complete the MaxSAFTM construction on time and on budget, as well as other matters
discussed in this Annual Report that are not purely historical data, are forward-looking statements. These forward-looking
statements are based on our expectations and beliefs as of the date hereof concerning future developments and their
potential effect on us. While management believes that these forward-looking statements are reasonable as and when made,
there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning
our current expectations for future sales and operating results are based on our forecasts for our existing operations and do
not include the potential impact of any future acquisition or disposition transactions. Our forward-looking statements
involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual
results to differ materially from our historical experience and our present expectations or projections. Known material
factors that could cause our actual results to differ from those in the forward-looking statements are those described in
Part I, Item 1A “Risk Factors” of this Annual Report. Readers are cautioned not to place undue reliance on forward-
looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
References in this Annual Report to “Calumet,” “the Company,” “we,” “our,” “us” or like terms refer to (i) Calumet
Specialty Products Partners, L.P. (the “Partnership”) and its subsidiaries before the completion of the Conversion and (ii)
Calumet, Inc. and its subsidiaries as of the completion of the Conversion and thereafter. References in this Annual Report
to “the General Partner” refer to Calumet GP, LLC, the general partner of the Partnership.
Table of Contents
3
SUMMARY OF RISK FACTORS
An investment in our common shares involves a significant degree of risk. Below is a summary of certain risk factors
that you should consider in evaluating us and our common shares. However, this list is not exhaustive. Before you invest in
our common shares, you should carefully consider the risk factors discussed or referenced below and under Item 1A. “Risk
Factors” in this Annual Report on Form 10-K. If any of the risks discussed below and under Item 1A. “Risk Factors” were
actually to occur, our business, financial position or results of operations could be materially adversely affected.
Risks Related to Our Business
●
Our business depends on supply and demand fundamentals, which can be adversely affected by numerous
macroeconomic factors outside of our control.
●
Our business has exposure to some commodities which are volatile, and a reduction in our margins will adversely
affect the amount of cash we will have available to operate our business and for payments of our debt obligations.
●
Our hedging activities may not be effective in reducing our exposure to commodity price risk and may reduce our
earnings, profitability and cash flows.
●
Decreases in the price of inventory and products may lead to a reduction in the borrowing base under our
revolving credit facility and our ability to issue letters of credit or the requirement that we post substantial
amounts of cash collateral for derivative instruments.
●
We depend on certain third-party pipelines for transportation of feedstocks and products, and if these pipelines
become unavailable to us, our revenues and cash available for payment of our debt obligations could decline.
●
The price volatility of utility services may result in decreases in our earnings, profitability and cash flows.
●
Our facilities incur operating hazards, and the potential limits on insurance coverage could expose us to
potentially significant liability costs.
●
An impairment of our long-lived assets or goodwill could reduce our earnings or negatively impact our financial
condition and results of operations.
●
Competition in our industry is intense, and an increase in competition in the markets in which we sell our
products could adversely affect our earnings and profitability.
●
We depend on unionized labor for the operation of many of our facilities. Any work stoppages or labor
disturbances at these facilities could disrupt our business and negatively impact our financial condition and results
of operations.
●
Our method of valuing inventory may result in decreases in net income.
●
Our arrangements with J. Aron (as defined herein) expose us to J. Aron-related credit and performance risk as
well as potential refinancing risks.
●
We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to
operate our business.
●
Our financing arrangements contain operating and financial provisions that restrict our business and financing
activities.
●
A change of control could result in us facing substantial repayment obligations under our revolving credit facility,
our senior notes, our secured hedge agreements, and our Supply and Offtake Agreement (as defined below).
●
We must make substantial capital expenditures for our facilities to maintain their reliability and efficiency.
●
We may incur significant environmental costs and liabilities in the operation of our refineries, facilities, terminals
and related facilities.
●
We are subject to compliance with stringent environmental and occupational health and safety laws and
regulations.
Table of Contents
4
●
The availability and cost of renewable identification numbers and results of litigation related to our SRE petitions
could have a material adverse effect on our results of operations and financial condition and our ability to make
payments on our debt obligations.
●
Our and our customers’ operations are subject to risks arising out of the threat of climate change, including
operational, regulatory, political, litigation and financial risks, which could result in increased operating and
capital costs for our customers and reduced demand for the products and services we provide.
●
We could incur substantial costs or disruptions in our business if we cannot obtain or maintain necessary permits
and authorizations or otherwise comply with occupational, environmental and other laws and regulations.
Risks Related to Montana Renewables
●
If there is not sufficient demand for renewable energy, if renewable energy markets do not develop or take longer
to develop than we anticipate, or if we do not realize the expected SAF premium we may be unable to achieve our
investment objectives for Montana Renewables, LLC (“MRL”).
●
Montana Renewables is subject to numerous operating risks, which could materially adversely impact our results
of operations and financial conditions.
●
A significant component of our product margin consists of a variety of government subsidies, incentives and
mandates.
●
Transactions between the Company and MRL present possible conflicts of interest that could have an adverse
effect on the Company if they are not manage appropriately.
●
Increases to the cost of transportation services or equipment related to our feedstock materials and renewable
transportation fuels could materially and adversely affect our sales revenues and cost of operations.
●
The production of renewable fuels is a growing industry, and we are expecting to encounter significant
competition in the marketplace.
Risks Related to Our Common Stock
●
The price of our common stock may experience volatility
●
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that
may make it more difficult for a third party to acquire control of us.
●
The value of our common stock may be diluted by future equity issuances (including upon the exercise of the
outstanding warrants), and shares eligible for future sale may have adverse effects on our share price.
Risks Related to Tax Matters
●
We are subject to risks arising from compliance with and changes in tax laws.
Table of Contents
5
PART I
Items 1 and 2. Business and Properties
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 business is organized into the following reportable segments:
Specialty Products and Solutions; Montana/Renewables; Performance Brands; and Corporate. 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 Renewables facility, we process a variety of geographically advantaged renewable feedstocks into
renewable diesel, sustainable aviation fuel (“SAF”), renewable hydrogen, renewable natural gas, renewable propane, and
renewable naphtha that are distributed into renewables 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
Corporate Conversion
On July 10, 2024, Calumet, Inc., a Delaware corporation (the “Company” or “Calumet”), completed the previously
announced conversion transaction contemplated by the Conversion Agreement, dated as of February 9, 2024 (as amended,
the “Conversion Agreement”), by and among the Company, Calumet Specialty Products Partners, L.P. (the “Partnership”),
the General Partner, Calumet Merger Sub I LLC (“Merger Sub I”), Calumet Merger Sub II LLC (“Merger Sub II”) and the
other parties thereto, including The Heritage Group (the “Sponsor Parties”). Pursuant to the Conversion Agreement, (a)
Merger Sub II merged with and into the Partnership, with the Partnership continuing as the surviving entity and a wholly
owned subsidiary of the Company, and all of the common units were exchanged into the right to receive an equal number
of shares of common stock, par value $0.01 per share, of the Company (“Common Stock”) and (b) Merger Sub I merged
with and into the General Partner, with the General Partner continuing as the surviving entity and a wholly owned
subsidiary of the Company, and all outstanding equity interests of the General Partner (1,640,583 general partner units)
were exchanged into the right to receive an aggregate of 5,500,000 shares of Common Stock and 2,000,000 warrants to
purchase common stock at an exercise price of $20.00 per share (subject to adjustment) on or prior to July 10, 2027 (such
transactions, the “Conversion”).
Table of Contents
6
Our Assets
Our primary operating assets consist of:
Sales Volume for the
Year Ended December 31,
2024 in Barrels per
Facility
Location
Year Acquired
Day (“bpd”)
Products
Calumet Packaging
Louisiana
2012
1,353
Specialty products including premium
industrial and consumer synthetic
lubricants, fuels and solvents
Royal Purple
Texas
2012
357
Specialty products including premium
industrial and consumer synthetic
lubricants
Missouri
Missouri
2012
166
Specialty products including polyol ester-
based synthetic lubricants
Karns City
Pennsylvania
2008
1,686
Specialty white mineral oils, solvents,
petrolatums, gelled hydrocarbons, cable
fillers and natural petroleum sulfonates
Dickinson
Texas
2008
571
Specialty white mineral oils, compressor
lubricants and natural petroleum
sulfonates
Cotton Valley
Louisiana
1995
5,005
Specialty solvents used principally in the
manufacture of paints, cleaners,
automotive products and drilling fluids
Princeton
Louisiana
1990
4,983
Specialty lubricating oils, including
process oils, base oils, transformer oils,
refrigeration oils, and asphalt
Shreveport
Louisiana
2001
45,224
Specialty lubricating oils and waxes,
gasoline, diesel, jet fuel and asphalt
Montana Refining
Montana
2012
13,753
Specialty asphalt, gasoline, diesel, and jet
fuel
Montana Renewables
Montana
2021
10,063
Renewable diesel, sustainable aviation
fuel, renewable hydrogen, renewable
natural gas, renewable propane, and
renewable naphtha
Storage, Distribution and Logistics Assets. We own and operate a product terminal in Burnham, Illinois with aggregate
storage capacities of approximately 150,000 barrels. The Burnham terminal, as well as additional owned and leased
facilities throughout the U.S., facilitate the distribution of products in the Upper Midwest, West Coast and Mid-Continent
regions of the U.S. and Canada.
We also use approximately 2,100 leased railcars primarily to receive and ship crude oil and distribute our specialty and
fuel products throughout the U.S. and Canada. In addition, we use approximately 450 leased railcars to source renewable
feedstocks and distribute renewable fuels products into the western half of North America. In total, we have approximately
7.0 million barrels of aggregate storage capacity at our facilities and leased storage locations.
Montana Renewables. At our Montana Renewables 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. These renewable fuels are distributed into renewable markets in the western
half of North America.
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7
Business Strategies
Our management team is dedicated to improving our operations by executing the following strategies:
●
Enhance Profitability of Our Existing Assets. We focus on identifying opportunities to improve our asset base,
deepening our competitive advantages, and increasing our throughput, profitability, and cash flows. Our highest
current priority is streamlining the operations at our Montana Renewables facility and planning for expansion
projects at the facility. As part of this project design, in 2022 we converted the historical Great Falls refinery into
two independent facilities: Calumet Montana Refining (“CMR”), a 15,000 bpd specialty asphalt facility; and
Montana Renewables, a 15,000 bpd renewable fuels production facility. We expanded our Montana Renewables
facility in 2023, as we successfully commissioned a renewable hydrogen plant, a feedstock pre-treatment unit,
and a sustainable aviation fuel unit. The feedstock pre-treatment unit is expected to unlock the advantaged price
and feedstock optionality we have in Montana and the commissioning of the sustainable aviation fuel unit made
Montana Renewables one of the largest SAF producers in the western hemisphere in 2024. Elsewhere, in 2024,
we continued our efforts to upgrade infrastructure at our Shreveport facility, which included projects to harden the
existing assets to withstand severe weather events such as hurricanes and winter freezes. In addition to this, we
installed a new pipeline connection at our Shreveport location that will provide the facility additional flexibility
and access to more advantageous crude supply. Prior to 2024, we made investments in a polymerized modified
asphalt unit at our Great Falls Specialty Asphalt facility (part of CMR) in 2022, additional wax blending assets at
our Calumet Paralogics, LLC (“Paralogics”) facility in 2021, and the addition of storage capacity to increase sales
of our most profitable solvents at our Cotton Valley facility in 2021. In addition, we have undertaken various
small expansion and optimization projects in our Performance Brands segment over the past four years, including
a new packaging line for 1.0 gallon cans of TruFuel to support growth, a new 2.1 gallon pail TruFuel line to meet
the market demand for larger package sizes, and a new quart line in Porter, Texas to recognize efficiencies in
packaging Bel-Ray products. We intend to continue increasing the profitability of our existing asset base through
various low capital requirement measures which may include investments targeting more efficient logistics,
improving the product mix of our processing units, and reducing costs through operational modernizations.
●
Concentrate on Positive and Growing Cash Flows. We intend to continue to focus on operating assets and
businesses that generate positive and growing cash flows. Approximately 81.9% of our continuing operations
gross profit in 2024 was generated by our Specialty Products and Solutions segment, which is characterized by
stable customer relationships due to our customers’ requirements for the specialized products we provide. In
addition, we manage our exposure to crude oil price fluctuations in this segment by passing on incremental
feedstock costs to our specialty products customers. In our Performance Brands segment, which accounted for
approximately 41.3% of our continuing operations gross profit in 2024, we blend, package and market high
performance products through our Royal Purple, Bel-Ray, and TruFuel brands. Our fast-growing portfolio of
high-performance brands are characterized by strong customer loyalty and stable cash flows. In our
Montana/Renewables segment, which accounted for approximately (23.2)% of our continuing operations gross
profit in 2024, we expect growth in cash flows as a result of market recovery and higher throughput. Historically,
renewable diesel margins have been both significantly higher and more stable than fuel margins, but 2024 was a
trough condition.
●
Develop and Expand Our Customer Relationships. Due to the specialized nature of certain of our products, the
high cost of replacement and the long lead-time associated with the development and production of many of our
specialty products, our customers are incentivized to continue their relationships with us. We believe that we offer
a more diversified product slate to our customers than competitors do, and we also offer more technical support
and bespoke services. In fiscal year 2024, we sold a range of over 1,900 specialty and fuels products to
approximately 2,400 customers. We intend to continue to assist our existing customers in their efforts to expand
their product offerings, as well as marketing specialty product formulations and services to new customers. By
continuing to service our long-term relationships with our broad base of existing customers and by constantly
targeting solutions for new customers, we seek to limit our dependence on any one portion of our customer base.
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8
●
Disciplined Approach to Strategic and Complementary Acquisitions. We do not expect to focus on large
acquisitions in the near term. However, should the right opportunity develop, our senior management team is
prepared to consider acquiring low-risk assets where we can enhance operations and improve profitability and
product lines that will complement and expand our specialty product offerings. For example, in March 2020, we
acquired Paralogics, a producer of candle and industrial wax blends, which expanded our presence in the
specialty wax blending and packaging market while adding new capabilities into our existing wax value chain. In
the future, we intend to continue pursuing prudent, accretive acquisitions that will deepen our long-term
competitive advantages. We intend to reduce our leverage over time and maintain a capital structure that
facilitates competitive access to the capital markets.
Competitive Strengths
We believe that we are well positioned to execute our business strategies successfully based on the following
competitive strengths:
●
We Have Strong Relationships with a Premier Customer Base. We have long-term relationships with many of our
customers and we believe that we will continue to benefit from these relationships. Many of these relationships
involve lengthy approval processes or certifications that may make switching to a different supplier difficult. In
fiscal year 2024, we sold our products to approximately 2,400 customers, and we are continually seeking to
deepen those relationships across our broad and diversified customer base. No single customer accounted for
more than 10% of our consolidated sales for any of the three years ended December 31, 2024, 2023 and 2022.
●
We Offer Our Customers a Diverse Range of Specialty Products. We offer a wide range of over 1,900 specialty
products. We believe that our ability to provide our customers with a more diverse selection of products than most
of our competitors gives us an advantage in meeting the needs of large, strategic customers and allows us to
compete in profitable niches. We believe that we are the only specialty products manufacturer in North America
that produces all six of the following products: naphthenic lubricating oils, paraffinic lubricating oils, waxes,
solvents, white oils and petrolatums. Our ability to produce numerous specialty products allows us to ship
products between our facilities for product upgrading in order to meet customer specifications.
●
We are a Leader in North America’s Energy Transition. Our MRL facility is permitted to pretreat and convert
15,000 barrels per stream day of renewable feedstocks into low-emission sustainable fuel alternatives that directly
replace fossil fuel products. MRL is a leader in North America’s energy transition and one of the largest
Sustainable Aviation Fuel producers in the western hemisphere. The renewable fuel products produced by MRL
are distributed into renewable markets in the western half of North America.
●
Our Facilities Have a Unique Combination of Flexibility and Scale. Our facilities are equipped with advanced,
flexible technology that allows us to produce high-grade specialty products. For example, our integrated specialty
products complex in Northwest Louisiana consists of 27 processing units and 195 million gallons of storage
capacity across 400 tanks and has a wide variety of specialized hydroprocessing, dewaxing, emulsifying and
distillation capabilities that allow us to meet complex, bespoke customer needs at scale providing an advantaged
cost. Our acquisition of Paralogics also added new capabilities into our existing wax business value chain, adding
approximately 20 million pounds of annual blending and formulating capabilities. Our facilities also enjoy the
value and optionality of integration as many products can be further processed and upgraded at our own facilities.
●
We Have Leading, High-Growth Brands. Our Performance Brands segment benefits from well-known high-
performance premium brands in consumer, retail and industrial markets. These brands garner a premium and are
well positioned for growth. Further, the majority of products in our Specialty Products and Solutions segment are
marketed under well-known industrial and consumer-facing brands that are of high value in the market and in
many cases were established several decades ago.
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9
●
We Have an Experienced Management Team. Our team’s extensive experience within the specialty products,
commodities and renewable energy industries provides a strong foundation to build and optimize a diversified,
competitively advantaged business that can succeed in various business cycles and environments.
Potential Acquisition and Divestiture Activities
While we evaluate potential acquisitions of strategic and complementary assets that would deepen our competitive
advantage, our focus has been and continues to be to de-lever our balance sheet. We evaluate our portfolio on an ongoing
basis to allow an objective assessment of potential divestiture candidates that are non-core to our business and/or worth
more to a buyer than to us. The combination of acquisition and divestment activities is intended to maximize our return on
invested capital by creating and maintaining a portfolio of core assets that optimize our blend of feedstocks, improve our
operating efficiency and cash flows, and leverage our competitive strengths. We also intend to monetize all or a portion of
our equity in MRL over time.
As we optimize our asset portfolio, which may include the divestiture of certain non-core assets or all or a portion of
our equity in MRL, we intend to redeploy capital into projects to develop assets that are better suited to our core specialty
products business strategy and de-leverage our balance sheet.
Going forward, we intend to tailor our approach toward owning businesses with stable cash flows and growing end
markets. As a result, we may pursue potential arrangements with third parties to divest certain assets to enable us to further
reduce the amount of our required capital commitments and potential capital expenditures. We expect that any potential
divestitures of assets will also provide us with cash to reinvest in our business and repay debt.
Our Operating Assets and Contractual Arrangements
General
The following table sets forth information about our continuing operations after giving effect to the elimination of all
intercompany activity. Facility production volume differs from sales volume due to changes in inventories and the sale of
purchased blendstocks such as ethanol and specialty blendstocks, as well as the resale of crude oil.
Year Ended December 31,
2024
2023
% Change
2023
2022
% Change
(In bpd)
(In bpd)
Total sales volume (1)
88,007
79,805
10.3 %
79,805
82,946
(3.8)%
Facility production:
Specialty Products and Solutions:
Lubricating oils
12,174
10,358
17.5 %
10,358
10,951
(5.4)%
Solvents
7,570
7,208
5.0 %
7,208
7,100
1.5 %
Waxes
1,540
1,326
16.1 %
1,326
1,452
(8.7)%
Fuels, asphalt and other by-products
36,396
37,353
(2.6)%
37,353
40,221
(7.1)%
Total Specialty Products and Solutions
57,680
56,245
2.6 %
56,245
59,724
(5.8)%
Montana/Renewables:
Gasoline
3,556
3,898
(8.8)%
3,898
3,409
14.3 %
Diesel
2,830
2,941
(3.8)%
2,941
6,449
(54.4)%
Jet fuel
472
449
5.1 %
449
820
(45.2)%
Asphalt, heavy fuel oils and other
3,983
4,483
(11.2)%
4,483
6,942
(35.4)%
Renewable fuels
9,848
6,314
56.0 %
6,314
—
100.0 %
Total Montana/Renewables
20,689
18,085
14.4 %
18,085
17,620
2.6 %
Performance Brands
1,739
1,474
18.0 %
1,474
1,434
2.8 %
Total facility production
80,108
75,804
5.7 %
75,804
78,778
(3.8)%
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10
(1)
Total sales volume includes sales from the production at our facilities and certain third-party facilities pursuant to
supply and/or processing agreements, sales of inventories and the resale of crude oil to third-party customers. Total
sales volume includes the sale of purchased blendstocks.
The following table sets forth information about our sales of principal products by segment:
Year Ended December 31,
2024
2023
2022
(In millions)
% of Sales
(In millions)
% of Sales
(In millions)
% of Sales
Specialty Products and Solutions:
Lubricating oils
$
788.6
18.8 % $
763.8
18.3 % $
913.7
19.5 %
Solvents
407.3
9.7 %
398.5
9.5 %
434.9
9.4 %
Waxes
156.3
3.7 %
163.9
3.9 %
189.3
4.0 %
Fuels, asphalt and other by-products
1,437.1
34.3 % 1,550.7
37.1 % 1,970.1
42.0 %
Total
$ 2,789.3
66.5 % $ 2,876.9
68.8 % $ 3,508.0
74.9 %
Montana/Renewables:
Gasoline
$
140.8
3.4 % $
167.2
4.0 % $
188.1
4.0 %
Diesel
114.6
2.7 %
144.8
3.5 %
391.8
8.4 %
Jet fuel
18.2
0.4 %
20.5
0.5 %
41.8
0.9 %
Asphalt, heavy fuel oils and other
159.6
3.8 %
148.1
3.5 %
253.2
5.4 %
Renewable fuels
631.7
15.1 %
513.2
12.3 %
—
— %
Total
$ 1,064.9
25.4 % $
993.8
23.8 % $
874.9
18.7 %
Performance Brands
$
335.2
8.0 % $
310.3
7.4 % $
303.4
6.5 %
Consolidated sales
$ 4,189.4
100.0 % $ 4,181.0
100.0 % $ 4,686.3
100.0 %
Please read Note 18 — “Segments and Related Information” in Part II, Item 8 “Financial Statements and
Supplementary Data — Notes to Consolidated Financial Statements” of this Annual Report for additional financial
information about each of our segments and the geographic areas in which we conduct business.
Northwest Louisiana Integrated Specialty Complex
The assets in our Northwest Louisiana integrated specialty complex anchor our Specialty Products and Solutions
business segment. The assets in the Northwest Louisiana integrated specialty complex, primarily consist of our Shreveport
facility, Cotton Valley facility and Princeton facility, which in total, includes 27 processing units and 195 million gallons of
storage capacity across 400 tanks and have a wide variety of specialized hydroprocessing, dewaxing, emulsifying and
distillation capabilities that allow us to meet complex, bespoke customer needs at scale providing an advantaged cost.
Shreveport Facility
The Shreveport facility (“Shreveport”), located on a 240 acre site in Shreveport, Louisiana, currently has aggregate
crude oil throughput capacity of 60,000 bpd and processes paraffinic crude oil and associated feedstocks into fuel products,
paraffinic lubricating oils, waxes, asphalt and by-products.
The Shreveport facility consists of 17 major processing units including hydrotreating, catalytic reforming and
dewaxing units and approximately 3.3 million barrels of storage capacity in 130 storage tanks and related loading and
unloading facilities and utilities. Since our acquisition of the Shreveport facility in 2001, we have expanded the facility’s
capabilities by adding additional processing and blending facilities, adding a second reactor to the high pressure
hydrotreater, resuming production of gasoline, diesel and other fuel products and adding both 18,000 bpd of crude oil
throughput capacity and the capability to run up to 25,000 bpd of sour crude oil.
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11
The following table sets forth historical information about production at our Shreveport facility:
Shreveport Facility
Year Ended December 31,
2024
2023
2022
(In bpd)
Crude oil throughput capacity
60,000
60,000
60,000
Total feedstock runs (1) (2)
39,904
38,248
42,453
Total facility production (2) (3)
42,113
40,290
45,211
(1)
Total feedstock runs represent the barrels per day of crude oil and other feedstocks processed at our Shreveport
facility. Total feedstock runs do not include certain interplant feedstocks supplied by our Cotton Valley and Princeton
facilities.
(2)
Total facility production represents the barrels per day of specialty products and fuel products yielded from processing
crude oil and other feedstocks. The difference between total facility production and total feedstock runs is primarily a
result of the time lag between the input of feedstocks and production of finished products and volume loss.
(3)
Total facility production includes certain interplant feedstock supplied to our Cotton Valley and Princeton facilities and
our Karns City facility.
The Shreveport facility has a flexible operational configuration and operating personnel that facilitates the
development of opportunities to enhance profitability. Feedstock and product mix may fluctuate from one period to the
next to capture market opportunities.
The Shreveport facility receives crude oil via tank truck, railcar and a common carrier pipeline system that is operated
by a subsidiary of Plains All American Pipeline, L.P. (“Plains”) and is connected to Shreveport’s facilities. The Plains
pipeline system delivers local supplies of crude oil and condensates from north Louisiana and east Texas. The Plains
pipeline also connects to a Plains terminal in Longview, TX, which gives the refinery access to crude oil in west Texas and
access to the Cushing, Oklahoma storage hub. Crude oil is also purchased from various suppliers, including local
producers, who deliver crude oil to the Shreveport facility via tank truck.
The Shreveport facility also has direct pipeline access to the Enterprise Products Partners L.P. pipeline (“TEPPCO
pipeline”), on which it can ship certain grades of gasoline, diesel and jet fuel. Further, the refinery has direct access to the
Red River Terminal facility, which provides the facility with barge access, via the Red River, to major feedstock and
petroleum products logistics networks on the Mississippi River and Gulf Coast inland waterway system. The Shreveport
facility also ships its finished specialty products throughout the U.S. through both truck and railcar service.
Cotton Valley Facility
The Cotton Valley facility (“Cotton Valley”), located on a 77 acre site in Cotton Valley, Louisiana, currently has
aggregate crude oil throughput capacity of 13,600 bpd, hydrotreating capacity of 6,500 bpd and processes crude oil into
specialty solvents and residual fuel oil. The residual fuel oil is an important feedstock for the production of specialty
products at our Shreveport facility. We believe the Cotton Valley facility produces the most complete, single-facility line of
paraffinic solvents in the U.S.
The Cotton Valley facility consists of three major processing units that include a crude unit, a hydrotreater and a
fractionation train, approximately 625,000 barrels of storage capacity in 74 storage tanks and related loading and unloading
facilities and utilities. Since our acquisition of the Cotton Valley facility in 1995, we have expanded the facility’s
capabilities by installing a hydrotreater that removes aromatics, increased the crude unit processing capability to
13,600 bpd and reconfigured the facility’s fractionation train to improve product quality, enhance flexibility and lower
utility costs.
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12
The following table sets forth historical information about production at our Cotton Valley facility:
Cotton Valley Facility
Year Ended December 31,
2024
2023
2022
(In bpd)
Crude oil throughput capacity
13,600
13,600
13,600
Total feedstock runs (1) (2)
9,877
9,125
8,975
Total facility production (2) (3)
6,084
6,571
5,241
(1)
Total feedstock runs do not include certain interplant solvent feedstocks supplied by our Shreveport facility.
(2)
Total facility production represents the barrels per day of specialty products yielded from processing crude oil and
other feedstocks. The difference between total facility production and total feedstock runs is primarily a result of the
time lag between the input of feedstocks and the production of finished products, intermediates transferred to internal
sites for further processing, and volume loss.
(3)
Total facility production includes certain interplant feedstocks supplied to our Shreveport facility.
The Cotton Valley facility has a flexible operational configuration and operating personnel that facilitates the
development of opportunities to enhance profitability. Feedstock and product mix may fluctuate from one period to the
next to capture market opportunities, which allows us to respond to market changes and customer demands by modifying
the refinery’s product mix. The reconfigured fractionation train also allows the facility to satisfy demand fluctuations
efficiently without large finished product inventory requirements.
The Cotton Valley facility receives crude oil via tank truck. The Cotton Valley facility’s feedstock is primarily low
sulfur and paraffinic crude oil originating from north Louisiana and is purchased from various marketers and gatherers. In
addition, the Cotton Valley facility receives interplant feedstocks for solvent production from the Shreveport facility. The
Cotton Valley facility ships finished products by both truck and railcar service.
Princeton Facility
The Princeton facility (“Princeton”), located on a 208 acre site in Princeton, Louisiana, currently has aggregate crude
oil throughput capacity of 10,000 bpd and processes naphthenic crude oil into lubricating oils and asphalt. In addition,
feedstock is made for the Shreveport facility for further processing into ultra-low sulfur diesel. The asphalt produced at
Princeton may be further processed or blended for coating and roofing product applications at the Princeton facility or
transported to the Shreveport facility for further processing into bright stock.
The Princeton facility consists of seven major processing units, approximately 650,000 barrels of storage capacity in
200 storage tanks and related loading and unloading facilities and utilities. Since our acquisition of the Princeton facility in
1990, we have debottlenecked the crude unit to increase production capacity to 10,000 bpd, increased the hydrotreater’s
capacity to 7,000 bpd and upgraded the facility’s fractionation unit, which has enabled us to produce higher value specialty
products.
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13
The following table sets forth historical information about production at our Princeton facility:
Princeton Facility
Year Ended December 31,
2024
2023
2022
(In bpd)
Crude oil throughput capacity
10,000
10,000
10,000
Total feedstock runs (1)
7,512
7,724
7,259
Total facility production (1) (2)
5,110
5,631
5,426
(1)
Total facility production represents the barrels per day of specialty products yielded from processing crude oil and
other feedstocks. The difference between total facility production and total feedstock runs is primarily a result of the
time lag between the input of feedstocks and the production of finished products, intermediates transferred to internal
sites for further processing, and volume loss.
(2)
Total facility production includes certain interplant feedstocks supplied to our Shreveport facility.
The Princeton facility has a hydrotreater and significant fractionation capability enabling the refining of high quality
naphthenic lubricating oils at numerous distillation ranges. The Princeton facility’s processing capabilities consist of
atmospheric and vacuum distillation, hydrotreating, asphalt oxidation processing and clay/acid treating. In addition, we
have the necessary tankage and technology to process our asphalt into higher value product applications such as coatings,
road paving and specialty applications.
The Princeton facility receives crude oil via tank truck, railcar and the Plains pipeline system. Its crude oil supply
primarily originates from east Texas, south Texas and north Louisiana, purchased directly from third-party suppliers
under month-to-month evergreen supply contracts and on the spot market. The Princeton facility ships its finished products
throughout the U.S. via truck and railcar service.
Great Falls Specialty Asphalt Facility (CMR)
The Great Falls specialty asphalt facility (“Great Falls”), located on a 65 acre site in Great Falls, Montana, currently
has aggregate crude oil throughput capacity of 15,000 bpd and processes light and heavy crude oil from Canada into fuel
and asphalt products. In the fourth quarter of 2022, we converted a significant portion of the Great Falls specialty asphalt
facility into a renewable fuels production facility (see below). Upon completion of the conversion project, we continue to
own and operate the conventional Great Falls specialty asphalt facility with a reconfigured processing capacity of 15,000
bpd of Canadian crude. The facility is focused on the production of high-quality specialty asphalt, as well as satisfying
local demand for conventional fuels.
The Great Falls specialty asphalt facility consists of 15 major processing units including hydrotreating, catalytic
reforming, hydrocracking, fluid catalytic cracking and alkylation units, approximately 76 thousand barrels of tank shell
storage capacity in 75 tanks and related loading and unloading facilities and utilities.
The following table sets forth historical information about production at the Great Falls specialty asphalt facility:
Great Falls Specialty Asphalt Facility
Year Ended December 31,
2024
2023
2022
(In bpd)
Crude oil throughput capacity
15,000
15,000
15,000
Total feedstock runs (1) (2)
11,356
11,982
17,599
Total facility production (2)
10,841
11,772
17,619
(1)
Total feedstock runs represent the barrels per day of crude oil processed at our Great Falls specialty asphalt facility.
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14
(2)
Total facility production represents the barrels per day of specialty products and fuel products yielded from processing
crude oil and other feedstocks. The difference between total facility production and total feedstock runs is primarily a
result of the time lag between the input of feedstocks and the production of finished products, and volume loss.
Currently, the Great Falls specialty asphalt facility produces liquified petroleum gas, naphtha, gasoline, diesel, jet fuel
and asphalt, which are shipped by railcar and truck service. Finished fuel and asphalt sales are primarily made through spot
agreements and short-term contracts.
The Great Falls specialty asphalt facility purchases crude oil from various suppliers and receives crude oil through the
Interprovincial Bow River South and Rangeland pipeline systems, providing reliable access to high quality conventional
crude oil from western Canada.
In the fourth quarter of 2022, we completed the reconfiguration of our 30,000 bpd Great Falls specialty asphalt facility
into two unrelated facilities, including a 15,000 bpd specialty asphalt facility and a 15,000 bpd renewable fuels facility. The
specialty asphalt facility capitalizes on local access to cost-advantaged Canadian conventional crude oil, while producing
additional fuels and refined products for delivery into the regional market while meeting EPA requirements for gasoline
and diesel product sulfur limits and reducing air emissions. The renewable fuels facility is described below.
Great Falls Renewable Fuels Facility (“Montana Renewables”)
In the fourth quarter of 2022, Montana Renewables LLC, an unrestricted subsidiary of Calumet, completed the
conversion of a significant portion of our Great Falls specialty asphalt facility into a renewable fuels production facility
(the “Montana Renewables Facility”). The Montana Renewables Facility has a permitted throughput capacity of
15,000 bpd to pretreat and convert a wide variety of organic waste and seed oils into lower emissions, sustainable
alternatives to fossil fuels, including renewable hydrogen, renewable natural gas, renewable propane, renewable naphtha,
renewable kerosene/sustainable aviation fuel, and renewable diesel.
As part of the conversion project, we also constructed and commissioned an innovative renewable hydrogen unit,
which further lowered carbon intensity and increased the throughput of the Montana Renewables facility. Further, a new
state of the art feedstock pre-treater, which combined with proximity to advantaged feedstocks and low-carbon product
markets provides lasting competitive advantage to Montana Renewables.
Missouri Facility
The Missouri facility (“Missouri”), located on a 22 acre site in Louisiana, Missouri, develops and produces polyol
ester synthetic lubricants for use in refrigeration compressors, commercial aviation and polyol ester base stocks. In
December 2015, we completed a project to more than double the production capacity of the facility from 35 million pounds
to 75 million pounds per year. The facility has approximately 35,000 barrels of storage capacity in 64 tanks and related
loading and unloading facilities and utilities. The facility receives its fatty acids and alcohol feedstocks and additives by
truck and railcar under supply agreements or spot agreements with various suppliers.
The Missouri facility utilizes the latest batch esterification processes designed to ensure blending accuracy while
maintaining production flexibility to meet customer needs.
Calumet Packaging
The Calumet Packaging facility (“Calumet Packaging”), located on a 10 acre site in Shreveport, Louisiana, develops,
blends and packages high performance synthetic lubricants, fuels and solvent products for use in industrial, commercial
and automotive applications. The Calumet Packaging facility’s processing capability includes state-of-the-art blending and
packaging equipment. The facility has approximately 75,000 barrels of storage capacity and related loading and unloading
facilities. The facility receives its base oil feedstocks and additives by truck and rail under supply agreements or spot
agreements with various suppliers.
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15
Royal Purple
The Royal Purple facility (“Royal Purple”), located on a 20 acre site in Porter, Texas, develops, blends and packages
high performance synthetic lubricants and fluid additive products for use in industrial, commercial and automotive
applications. The Royal Purple facility’s processing capability includes 10 in-house packaging and production lines.
Outsourced packaging services for specific products are also fulfilled. The facility has approximately 30,500 barrels of
storage capacity in 91 tanks and related loading and unloading facilities. The facility receives its base oil feedstocks and
additives by truck under supply agreements or spot agreements with various suppliers.
Karns City and Dickinson Facilities and Other Processing Agreements
The Karns City facility (“Karns City”), located on a 225 acre site in Karns City, Pennsylvania, has aggregate base oil
throughput capacity of 3,000 bpd and produces white mineral oils, solvents, petrolatums, gelled hydrocarbons, cable fillers
and natural petroleum sulfonates. The Karns City facility’s processing capability includes hydrotreating, fractionation, acid
treating, filtering, blending and packaging. In addition, the facility has approximately 817,000 barrels of storage capacity in
250 tanks and related loading and unloading facilities and utilities.
The Dickinson facility (“Dickinson”), located on a 28 acre site in Dickinson, Texas, has aggregate base oil throughput
capacity of 1,300 bpd and produces white mineral oils, compressor lubricants and natural petroleum sulfonates. The
Dickinson facility’s processing capability includes acid treating, filtering and blending. The facility has approximately
183,000 barrels of storage capacity in 186 tanks and related loading and unloading facilities and utilities.
These facilities each receive their base oil feedstocks by railcar and truck under supply agreements or spot purchases
with various suppliers, the most significant of which is a supply agreement with Phillips 66. Please read “— Our Crude Oil
and Feedstock Supply” below for further discussion of the long-term supply agreement with Phillips 66.
The following table sets forth the combined historical information about production at our Karns City, Dickinson and
certain other facilities:
Combined Karns City, Dickinson and Other Facilities
Year Ended December 31,
2024
2023
2022
(in bpd)
Feedstock throughput capacity (1)
11,300
11,300
11,300
Total feedstock runs (2) (3)
4,012
3,396
3,482
Total production (3)
4,072
3,419
3,582
(1)
Includes Karns City, Dickinson and certain other facilities.
(2)
Includes feedstock runs at our Karns City and Dickinson facilities as well as throughput at certain third-party facilities
pursuant to supply and/or processing agreements and includes certain interplant feedstocks supplied from our
Shreveport facility.
(3)
Total production represents the barrels per day of specialty products yielded from processing feedstocks at our Karns
City and Dickinson facilities and certain third-party facilities pursuant to supply and/or processing agreements. The
difference between total production and total feedstock runs is primarily a result of the time lag between the input of
feedstocks and the production of finished products.
Other Logistics Assets
Terminals are complementary to our refineries and play a key role in moving our products to end-user markets by
providing services including distribution and blending to achieve specified products and storage and inventory
management. In addition to the Burnham terminal, we own and lease additional facilities, primarily related to distribution
of finished products, throughout the U.S.
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16
Burnham Terminal: We own and operate a terminal located on an 11 acre site, in Burnham, Illinois. The Burnham
terminal receives specialty products from certain of our refineries primarily by railcar and distributes them by truck and
railcar to our customers in the Upper Midwest and East Coast regions of the U.S. and in Canada. The terminal includes a
tank farm with 90 tanks having aggregate storage capacity of approximately 150,000 barrels, supplying lube base oils, food
grade white oils and aliphatic solvents, as well as viscosity index additives and tackifiers.
We use approximately 2,100 railcars leased from various lessors. This fleet of railcars enables us to receive and ship
crude oil and distribute various specialty products and fuel products throughout the U.S. and Canada to and from each of
our facilities. In addition, we use approximately 450 leased railcars to source renewable feedstocks and distribute
renewable fuels products into the western half of North America.
Our Crude Oil and Feedstock Supply
We purchase crude oil and other feedstocks from major oil companies as well as from various crude oil gatherers and
marketers in Texas, north Louisiana and Canada. Crude oil supplies at our facilities are as follows:
In 2024, BP Products North America Inc. (“BP”) supplied us with approximately 54.5% of our total crude oil supply
under term contracts and month-to-month evergreen crude oil supply contracts. In 2024, Macquarie Energy Canada LTD.
(“Macquarie”) supplied us with approximately 17.7% of our total crude oil supply under a crude oil supply agreement.
Each of our facilities is dependent on one or more key suppliers and the loss of any of these suppliers would adversely
affect our financial results to the extent we were unable to find another supplier of this substantial amount of crude oil.
We have short-term and long-term contracts with our crude oil suppliers. For example, a majority of our crude oil
supply contracts with Plains are currently month-to-month and terminable upon 90 days’ notice. Additionally, our crude oil
supply agreement with BP was amended and restated in December 2016, and automatically renews for successive one-year
terms each March unless terminated by either party upon 90 days’ notice (“BP Purchase Agreement”). This agreement has
not been terminated by either party. We also purchase foreign crude oil when its spot market price is attractive relative to
the price of crude oil from domestic sources.
MRL, an unrestricted subsidiary of the Company, has entered into various term supply agreements for renewable
feedstocks that are key to the operations of the Montana Renewables facility.
We have various long-term feedstock supply agreements with Phillips 66, with some agreements operating under the
option to continue on a month-to-month basis thereafter, for feedstocks that are key to the operations of our Karns City and
Dickinson facilities. In addition, certain products of our refineries can be used as feedstocks by these facilities.
We believe that adequate supplies of crude oil and feedstocks will continue to be available to us.
Our cost to acquire crude oil and feedstocks and the prices for which we ultimately can sell refined products depend on
a number of factors beyond our control, including regional and global supply of and demand for crude oil, other feedstocks
and specialty and fuel products. These, in turn, are dependent upon, among other things, the availability of imports, overall
economic conditions, production levels of domestic and foreign suppliers, U.S. relationships with foreign governments,
political affairs and the extent of governmental regulation. We have historically been able to pass on the
Facility
Crude Oil / Feedstock Slate
Mode of Transportation
Shreveport
West Texas Intermediate (“WTI”), local crude oils from East Texas,
North Louisiana, Arkansas and Light Louisiana Sweet (“LLS”)
Tank truck, railcar and Plains
Pipeline
Cotton Valley
Local paraffinic crude oil
Tank truck
Great Falls Specialty
Asphalt Facility
Canadian Heavy (e.g. Bow River) and Canadian Light Sour
Front Range Pipeline
Montana Renewables
Facility
Organic waste and seed oil materials
Railcar
Princeton
Local and imported naphthenic crude oil
Tank truck, railcar and Plains
Pipeline
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17
costs associated with increased crude oil and feedstock prices to our specialty products customers, although the increase in
selling prices for specialty products typically lags the rising cost of crude oil. From time to time, we use a hedging program
to manage a portion of our commodity price risk.
Our Products, Markets and Customers
Products
We produce a full line of specialty products, including lubricating oils, solvents, waxes, food grade white oils,
pharmaceutical grade petrolatums, and other products, as well as a variety of fuel and fuel related products, including
asphalt and heavy fuel oils. We also blend, package and market high performance specialty products through our Royal
Purple, Bel-Ray, and TruFuel brands. At our Montana Renewables facility, we produce a variety of renewable fuels
products, including 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. Our
customers purchase specialty products primarily as raw material components for consumer-facing and industrial products.
Our customers also purchase renewable fuels, which are consumed to reduce lifecycle carbon emissions.
The following table depicts a representative sample of the diversity of end-use applications for the products we
produce:
Representative Sample of End-Use Applications by Product (1)
(1)
Based on the percentage of total sales for the year ended December 31, 2024. Except for the listed fuel products,
renewable products and certain packaged and synthetic specialty products, we do not produce any of these end-use
products.
Lubricating Oils
Solvents
Waxes
Packaged and Synthetic
Specialty Products
Fuels &
Fuel Related
Products
Renewable Products
19%
10%
4%
8%
44%
15%
● Hydraulic oils
● Passenger car
motor oils
● Railroad engine
oils
● Cutting oils
● Compressor oils
● Metalworking
fluids
● Transformer oils
● Rubber process
oils
● Industrial
lubricants
● Gear oils
● Grease
● Automatic
transmission fluid
● Animal feed
dedusting
● Baby oils
● Bakery pan oils
● Catalyst carriers
● Gelatin capsule
lubricants
● Sunscreen
● Waterless
hand
cleaners
● Alkyd resin
diluents
● Automotive
products
● Calibration
fluids
● Charcoal
lighter fluids
● Chemical
processing
● Drilling
fluids
● Printing inks
● Water
treatment
● Paint and
coatings
● Stains
● Paraffin waxes
● FDA compliant
products
● Candles
● Adhesives
● Crayons
● Floor care
● PVC
● Paint strippers
● Skin & hair care
● Timber
treatment
● Waterproofing
● Pharmaceuticals
● Cosmetics
● Refrigeration
compressor oils
● Positive displacement
and roto-dynamic
compressor oils
● Commercial and
military jet engine oil
● Lubricating greases
● Gear oils
● Aviation hydraulic oils
● High performance
small engine fuels
● Two cycle and four
stroke engine oils
● High performance
automotive engine oils
● High performance
industrial lubricants
● High temperature
chain lubricants
● Food contact grade
lubricants
● Charcoal lighter fluids
and other solvents
● Engine treatment
additives
● Gasoline
● Diesel
● Jet fuel
● Marine fuel
● Ethanol free fuels
● Fluid catalytic
cracking feedstock
● Asphalt vacuum
residuals
● Mixed butanes
● Roofing flux
● Paving asphalt
● Heavy fuel oils
● Renewable hydrogen
● Renewable natural
gas
● Renewable propane
● Renewable naphtha
● Renewable
kerosene/sustainable
aviation fuel
● Renewable diesel
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18
Marketing
Our salespeople regularly visit customers and work in conjunction with our marketing department, the laboratories at
our production facilities and our technical services department, to focus on providing additional value to our customers,
such as formulation assistance, regulatory insight, and creating specialized blends and packaging that work optimally for
our customers.
Markets
Specialty Products. The specialty products market represents a small portion of the overall petroleum refining industry
in the U.S. Of the approximately 130 refineries currently in operation in the U.S., only a small number of the refineries are
considered specialty products producers and only a few compete with us in terms of the number of products produced.
Our specialty products are utilized in applications across a broad range of industries, including:
●
industrial goods such as finished lubricants, batteries, water treatment chemistry, mining lubricants, oilfield
drilling, electrical and transformer oils, adhesives, refrigeration compressor oils, aviation fluids, and agriculture
applications; and
●
consumer goods such as cosmetics, petroleum jelly, lotions, pharmaceuticals, food, candles, paint and coatings,
charcoal lighter fluids, and car care products.
We have the capability to ship our specialty products worldwide. In the U.S., we ship our specialty products via
railcars, trucks and barges. We use our fleet of leased railcars to ship our specialty products and a majority of our specialty
products sales are shipped in trucks owned and operated by several different third-party carriers. For international
shipments, which accounted for less than 10% of our consolidated sales in 2024, we ship via railcars and trucks to several
ports where the product is loaded onto vessels for shipment to customers abroad.
Fuel Products. The fuel products market represents a large portion of the overall petroleum refining industry in the
U.S. Of the approximately 130 refineries currently in operation in the U.S., a large number of the refineries are fuel
products producers; however, only a few compete with us in our local markets.
Renewable Fuel Products. The renewable fuel products market represents a small portion of the overall transportation
fuels industry in the U.S. MRL is a leading independent producer of renewable transportation fuels in North America and
one of the largest SAF producers in the western hemisphere. The renewable fuels market is in the rapid-growth phase of its
life cycle, highlighted by renewable diesel demand growing at an average annualized rate of approximately 100.0% over
the past three years, and SAF demand quadrupling in the past year. We believe we are well positioned to benefit from these
trends.
Gulf Coast Market (PADD 3)
Fuel products produced at our Shreveport facility can be sold locally or to the Midwest region of the U.S. through the
TEPPCO pipeline. Local sales are made from the TEPPCO terminal in Bossier City, Louisiana, located approximately
15 miles from the Shreveport facility, as well as from our own Shreveport facility terminal.
Gasoline, diesel and jet fuel from the Shreveport facility are sold primarily into the Louisiana, Texas and Arkansas
markets, and any excess volumes are sold to marketers further up the TEPPCO pipeline. Should the appropriate market
conditions arise, we have the capability to redirect and sell additional volumes into the Louisiana, Texas and Arkansas
markets rather than transport them to the Midwest region via the TEPPCO pipeline.
The Shreveport facility has the capacity to produce approximately 9,000 bpd of commercial jet fuel that can be
marketed to the U.S. Department of Defense, sold as Jet-A locally or sold via the TEPPCO pipeline, or transferred to the
Cotton Valley facility to be processed further as a feedstock to produce solvents.
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Additionally, we produce a number of fuel-related products including fluid catalytic cracking (“FCC”) feedstock,
vacuum residuals and mixed butanes. FCC feedstock is sold to other refiners as a feedstock for their FCC units to make
fuel products. Vacuum residuals are blended or processed further to make asphalt products. Volumes of vacuum residuals
which we cannot process are sold locally into the fuel oil market or sold via railcar to other refiners. Mixed butanes are
primarily available in the summer months and are primarily sold to local marketers. If the mixed butanes are not sold, they
are blended into our gasoline production.
Northwest Market (PADD 4)
Fuel and asphalt products produced at our Great Falls specialty asphalt facility can be sold locally and in Missouri,
Oklahoma, Texas, Arizona, North Dakota, South Dakota, Idaho, Oregon, Utah, Wyoming, Washington, Nevada, California
and Canada. Seasonally, fuel products from the Great Falls specialty asphalt facility are transported to terminals in
Washington and Utah.
Renewable diesel, sustainable aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and
renewable naphtha produced at our Montana Renewables facility are distributed into renewable markets in the western half
of North America.
Customers
Specialty Products. We have a diverse customer base for our specialty products. In fiscal year 2024, we sold our
specialty products to approximately 2,200 customers. Many of our customers are long-term customers who use our
products in specialty applications, after an approval process ranging from six months to two years.
Fuel Products. We have a diverse customer base for our fuel products. In fiscal year 2024, we sold our fuel products to
approximately 200 customers. Our diverse customer base includes wholesale distributors and retail chains. We are able to
sell the majority of the fuel products we produce at the Shreveport facility to the local markets of Louisiana, Texas and
Arkansas. We also have the ability to ship additional fuel products from the Shreveport facility to the Midwest region
through the TEPPCO pipeline. The majority of our fuel products produced at our Great Falls specialty asphalt facility are
sold to local markets in Montana and Idaho as well as in Canada. The renewable fuel products produced at our Montana
Renewables facility are distributed into renewable markets in the western half of North America.
Renewable Fuels Products. We sell our renewable fuels products to a relatively small number of investment grade
counterparties under multiyear offtake agreements for onward distribution into renewable markets in the western half of
North America. The robust demand during the placement process for the renewable fuels produced at our Montana
Renewables facility allows us to select an established, integrated customer base for our renewable products.
During the years ended December 31, 2024, 2023 and 2022, we had no customer that represented 10% or greater of
consolidated sales.
Competition
Competition in our markets is from a combination of large, integrated petroleum companies and independent refiners.
Many of our competitors are substantially larger than us and are engaged on a national or international basis in many
segments of the petroleum products business, including exploration and production, refining, transportation and marketing.
These competitors may have greater flexibility in responding to or absorbing market changes occurring in one or more of
these business segments. We distinguish our competitors according to the products that they produce. Set forth below is a
description of our significant competitors according to product category.
Naphthenic Lubricating Oils. Our primary competitors in producing naphthenic lubricating oils include Ergon
Refining, Inc., Cross Oil Refining and Marketing, Inc. and San Joaquin Refining Co., Inc.
Paraffinic Lubricating Oils. Our primary competitors in producing paraffinic lubricating oils include Exxon Mobil
Corporation, Motiva Enterprises, LLC, Phillips 66, HF Sinclair Corporation and Chevron Corporation.
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Paraffin Waxes. Our primary competitors in producing paraffin waxes include Exxon Mobil Corporation, HF Sinclair
Corporation, The International Group Inc. and Ergon, Inc.
Solvents. Our primary competitors in producing solvents include CITGO Petroleum Corporation, ExxonMobil
Chemical Company and Total S.A.
Polyol ester Based Specialty Products. Our primary competitors in producing polyol ester-based specialty products
include LANXESS, ExxonMobil Corporation, BASF Corporation, Croda International plc, Nyco Products Corporation and
Zschimmer & Schwartz, Inc.
Packaged and Synthetic Specialty Products. Our primary competitors in retail and commercial packaged and synthetic
specialty products include Exxon Mobil Corporation (Mobil 1), Valvoline, Inc. and other independent lubricant
manufacturers. Our primary competitors in industrial packaged and synthetic specialty products include Exxon Mobil
Corporation, Royal Dutch Shell plc, Fuchs and other independent lubricant manufacturers.
Fuel Products and By-Products. Our primary competitors in producing fuel products in the local markets in which we
operate include Delek US Holdings, Exxon Mobil Corporation, Phillips 66 and Cenex.
Renewable Fuel Products. Our primary competitors in producing renewable fuel products in the US West Coast
markets Are Marathon Petroleum Company, Phillips 66 and Chevron Corporation. A significant portion of our renewable
products are placed in other markets which lack indigenous renewables production.
Our ability to compete effectively depends on our responsiveness to customer needs and our ability to maintain
competitive prices and product and service offerings. We believe that our flexibility and customer responsiveness
differentiates us from many of our larger competitors. However, it is possible that new or existing competitors could enter
the markets in which we operate, which could negatively affect our financial performance.
Governmental Regulation
From time to time, we are a party to certain claims and litigation incidental to our business, including claims made by
various taxation and regulatory authorities, such as the IRS, the EPA and the U.S. Occupational Safety and Health
Administration (“OSHA”), as well as various state environmental regulatory bodies and state and local departments of
revenue, as the result of audits or reviews of our business.
Environmental and Occupational Health and Safety Matters
Environmental
We conduct crude oil and specialty refining, blending and terminal operations, certain activities of which are subject to
stringent federal, regional, state and local laws and regulations governing worker health and safety, the discharge of
materials into the environment, and environmental protection. These laws and regulations impose legal standards and
obligations that are applicable to our operations, such as requiring the acquisition of permits to conduct regulated activities,
restricting the manner in which we may release materials into the environment, requiring mitigation of pollutant discharges
from current operations that may include incurring capital expenditures to limit or prevent unauthorized releases from our
equipment and facilities, requiring remedial activities to mitigate pollution from former operations, imposing substantial
liabilities for pollution resulting from our operations, and requiring the application of specific health and safety criteria
addressing worker protection. Failure to comply with these laws and regulations may result in the assessment of sanctions,
including administrative, civil and criminal penalties; the imposition of investigatory, remedial or corrective action
obligations or the incurrence of capital expenditures; the occurrence of restrictions, delays or cancellations in the
permitting, development or expansion of projects; and the issuance of injunctive relief limiting or prohibiting our activities
in a particular area.
Moreover, certain of these laws impose joint and several liability and strict liability for costs required to remediate and
restore sites where petroleum hydrocarbons, wastes or other materials have been disposed of or released and areas
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where any such contamination has come to be located. In addition, new environmental and worker safety laws and
regulations, amendment of existing laws and regulations, reinterpretation of legal requirements, increased governmental
enforcement or other developments could significantly increase our operational or compliance expenditures, including as
discussed below in more detail.
Remediation of subsurface contamination continues at certain of our refinery sites and is being overseen by the
appropriate governmental agencies. Based on current investigative and remedial activities, we believe that the cost to
control or remediate the soil and groundwater contamination at these refineries will not have a material adverse effect on
our financial condition. However, such costs are often unpredictable and, therefore, there can be no assurance that the
future costs of these remedial projects will not become material.
Great Falls Refinery
In connection with the acquisition of the Great Falls refinery from Connacher Oil and Gas Limited (“Connacher”), we
became a party to an existing 2002 Refinery Initiative Consent Decree (the “Great Falls Consent Decree”) with the EPA
and the Montana Department of Environmental Quality (the “MDEQ”). The material obligations imposed by the Great
Falls Consent Decree have been completed. On September 27, 2012, Montana Refining Company, Inc., received a final
Corrective Action Order on Consent, replacing the refinery’s previously held hazardous waste permit. This Corrective
Action Order on Consent governs the investigation and remediation of contamination at the Great Falls refinery.
We believe the majority of the impacts related to such contamination at the Great Falls refinery are covered by a
contractual indemnity provided by a subsidiary of HF Sinclair Corporation (the “Seller”), the owner and operator of the
Great Falls refinery prior to its acquisition by Connacher, under an asset purchase agreement between the Seller and
Connacher, pursuant to which Connacher acquired the Great Falls refinery.
Under this asset purchase agreement, the Seller agreed to indemnify Connacher and Montana Refining Company, Inc.,
subject to timely notification, certain conditions and certain monetary baskets and caps, for environmental conditions
arising under the Seller’s ownership and operation of the Great Falls refinery and existing as of the date of sale to
Connacher. During 2014, HF Sinclair Corporation (“Holly”) provided us a notice challenging our position that the Seller is
obligated to indemnify our remediation expenses for environmental conditions to the extent arising under Holly’s
ownership and operation of the refinery and existing as of the date of sale to Connacher. On September 22, 2015, we
initiated a lawsuit against Holly and the Sellers. The court ordered that all of the claims be addressed in arbitration. The
arbitration panel confirmed that the sellers of the Great Falls refinery retained the liability for all pre-closing contamination
with respect to third-party claims indefinitely and with respect to first party claims for which the sellers received notice
within five years after the sale of the refinery, which claims are subject to the requirements otherwise set forth in the asset
purchase agreement. Among other things, the panel denied the Company’s demands for reimbursement for costs already
incurred by the Company prior to the arbitration but left open the Company’s ability to make future claims. The Company
expects that it may incur costs to remediate other environmental conditions at the Great Falls refinery. The Company
currently believes that these other costs it may incur will not be material to its financial position or results of operations.
Air Emissions
Our operations are subject to the federal Clean Air Act, as amended (“CAA”), and comparable state and local laws.
Amendments made to the CAA in 1990 require most industrial operations in the U.S. to incur capital expenditures to meet
the air emission control standards that are developed and implemented by the EPA and state environmental agencies. Under
the CAA, facilities that emit regulated air pollutants are subject to stringent regulations, including requirements to install
various levels of control technology on sources of pollutants. In addition, in recent years, the petroleum refining sector has
become subject to stringent federal regulations that impose maximum achievable control technology (“MACT”) on
refinery equipment emitting certain listed hazardous air pollutants. Some of our facilities have been included within the
categories of sources regulated by MACT rules. Our refining and terminal operations that emit regulated air pollutants are
also subject to air emissions permitting requirements that incorporate stringent control technology requirements for which
we may incur significant capital expenditures. Any renewal of those air emissions permits or a need to modify existing or
obtain new air emissions permits has the potential to delay the development of our projects. We can provide no assurance
that future compliance with existing or any new laws, regulations or permit requirements will not have a material adverse
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effect on our business, financial position or results of operations. For example, in 2015, the EPA issued a final rule under
the CAA making the National Ambient Air Quality Standard (“NAAQS”) for ground-level ozone more stringent. Since
that time, the EPA has issued area designations with respect to ground-level ozone and final requirements that apply to
state, local and tribal air agencies for implementing the 2015 NAAQS for ground-level ozone. States are expected to
implement more stringent requirements as a result of this new final rule, which could apply to our operations. EPA retained
the 2015 standards for ground-level ozone after a review completed in 2020. In 2021, EPA announced that it would
reconsider this standard, and in August 2023, EPA announced it would begin an entirely new review of the NAAQS for
ground-level ozone, and in December 2024, EPA published Volumes 1 and 2 of its Integrated Review Plan. Also, in 2015,
the EPA published a final rule that amended three refinery standards already in effect, imposing additional or, in some
cases, new emission control requirements on subject refineries. The final rule requires, among other things, the monitoring
of air concentrations of benzene around the refinery fence line perimeter and submittal of the fence line monitoring data to
the EPA on a quarterly basis; upgraded emissions controls for storage tanks, including controls for smaller capacity storage
vessels and storage vessels storing materials with lower vapor pressures than previously regulated; enhanced performance
requirements for flares including the use of a minimum of three pollution prevention measures, continuous monitoring of
flares and pressure release devices and analysis and remedy of flare release events; and compliance with emissions
standards for delayed coking units. These final rules and any other future air emissions rulemakings could impact us by
requiring installation of new emission controls on some of our equipment, resulting in longer permitting timelines, and
significantly increasing our capital expenditures and operating costs, which could adversely impact our business.
The CAA authorizes the EPA to periodically require modifications in the formulation of the refined transportation fuel
products we manufacture in order to limit the emissions associated with the fuel product’s final use. For example, in
February 2000, the EPA published regulations limiting the sulfur content allowed in gasoline. These regulations, referred to
as “Tier 2 Standards,” required the phase-in of gasoline sulfur standards beginning in 2004, with special provisions for
small refiners and for refiners serving those western U.S. states exhibiting lesser air quality problems. Similarly, the EPA
published regulations that limit the sulfur content of highway diesel beginning in 2006 from its former level of 500 parts
per million (“ppm”) to 15 ppm (the “ultra-low sulfur standard”). Our Shreveport and Great Falls facilities have
implemented the sulfur standard with respect to produced gasoline and produced diesel meeting the ultra-low sulfur
standard.
In 2014, the EPA published more stringent sulfur standards, referred to as “Tier 3 Standards,” including requiring that
motor gasoline will not contain more than 10 ppm of sulfur on an annual average basis. Our Shreveport and Great Falls
facilities are fully compliant with the 10 ppm sulfur standard with respect to produced gasoline. In addition, we are
required to meet the Mobile Source Air Toxics (“MSAT”) II Standards adopted by the EPA to reduce the benzene content
of motor gasoline produced at our facilities and have completed capital projects at our Shreveport and Great Falls facilities
to comply with those fuel quality requirements.
The EPA has issued RFS mandates, requiring refiners such as us to blend renewable fuels into the petroleum fuels they
produce and sell in the U.S. We, and other refiners subject to RFS, may meet the RFS requirements by blending the
necessary volumes of renewable transportation fuels produced by us or purchased from third parties. To the extent that
refiners are unable to blend renewable fuels into the products they produce in the quantities required to satisfy their
obligations under the RFS program, those refiners may purchase renewable credits, referred to as RINs, to maintain
compliance. To the extent that we exceed the minimum volumetric requirements for blending of renewable transportation
fuels, we generate our own RINs for which we have the option of retaining the RINs for current or future RFS compliance
or selling those RINs on the open market. We are currently unable to blend sufficient quantities of ethanol and biodiesel to
meet our requirements and, therefore, may have to purchase an increasing number of RINs. It is not possible at this time to
predict with certainty what those volumes or costs may be. Existing laws and regulations could change, including the
minimum volumes of renewable fuels that must be blended with refined petroleum fuels. For more information on the RFS
program, our participation in the program and risks associated with the program, see the following risk factor under Part I,
Item 1A of this Form 10-K: “The availability and cost of renewable identification numbers and results of litigation related
to our SRE petitions could have a material adverse effect on our results of operations and financial condition and our
ability to make payments on our debt obligations.”
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Climate Change
The threat of climate change continues to attract considerable public, governmental and scientific attention, both in the
U.S. and internationally. As a result, numerous proposals have been made and are likely to continue to be made by
international, national, regional, state, and local governments to monitor and limit emissions of greenhouse gases (“GHG”)
and to control such future emissions. Consequently, it is possible that our operations as well as the operations of our
customers may become subject to increased regulatory, political, physical, litigation and financial risks associated with the
processing of fossil fuels and/or emissions of GHGs. The adoption of legislation or regulations or other regulatory
initiatives by international, national, regional, state, and local governments that impose more stringent standards for GHG
emissions could require us to incur increased compliance costs or affect the price or availability of certain of our feedstocks
or products.
At the federal level, no comprehensive climate change legislation has been implemented to date. However, the EPA
has determined that GHG emissions present a danger to public health and the environment and has adopted regulations
under existing provisions of the federal CAA that, among other things: establish that Prevention of Significant
Deterioration (“PSD”) construction permit programs and Title V operating permit programs will include reviews for GHG
emissions from certain large stationary sources that are also potential major sources of criteria pollutant emissions; require
the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources; implement
CAA emission new source performance standards (“NSPS”) directing the reduction of methane from certain new, modified
or reconstructed facilities in the oil and natural gas sector; and together with the U.S. Department of Transportation
(“DOT”), implement GHG emissions limits on vehicles manufactured for operation in the U.S. Additionally, various states
and groups of states have adopted or are considering adopting legislation, regulations, or other regulatory initiatives that
are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction
of emissions. Some state courts (including the Montana Supreme Court in Held v. Montana (Mont. 2024)) have rendered
decisions imposing additional requirements on regulators and regulated entities with respect to environmental matters. At
the international level, there exists the United Nations-sponsored “Paris Agreement,” which calls upon nations to limit their
GHG emissions through individually determined reduction goals every five years after 2020.
There are also increasing financial risks for fossil fuel producers, as stockholders and bondholders currently invested
in fossil-fuel energy companies may elect to shift investments into non-fossil fuel energy related sectors. Institutional
lenders who provide financing to fossil-fuel energy companies are beginning to define sustainable lending practices, and
financial institutions may adopt policies that limit funding for fossil fuel energy companies, as governmental and
nongovernmental institutions focus on addressing climate-related risks in the financial sector. Although we are not an oil or
gas producer, it is possible that limitation of investments in and financings for fossil fuel energy companies could result in
the restriction, delay, or cancellation of drilling programs or development or production activities which could affect the
price or availability of certain of our feedstocks.
Some scientists have concluded that increasing concentrations of GHG in the earth’s atmosphere may produce climate
changes that have significant physical effects, such as increased frequency and severity of storms, floods and other climatic
events; if any such effects were to occur, they could have an adverse effect on our operations located throughout the U.S.
Hazardous Substances and Wastes
The Comprehensive Environmental Response, Compensation and Liability Act, as amended (“CERCLA”), also
known as the “Superfund” law, and comparable state laws impose liability without regard to fault or the legality of the
original conduct, on certain classes of persons who are considered to be responsible for the release of a hazardous
substance into the environment. Such classes of persons include the current and past owners and operators of sites where a
hazardous substance was released and companies that disposed or arranged for disposal of hazardous substances at offsite
locations, such as landfills. Under CERCLA, these “responsible persons” may be subject to joint and several, strict liability
for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural
resources, and for the costs of certain health studies. Separately, it is not uncommon for neighboring landowners and other
third parties to file claims under relevant state laws for personal injury and property damage allegedly caused by the release
of hazardous substances into the environment. In the course of our operations, we generate wastes or handle substances
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that may be regulated as hazardous substances, and we could become subject to liability under CERCLA and comparable
state laws.
We also may incur liability under the Resource Conservation and Recovery Act, as amended (“RCRA”), and
comparable state laws, which impose requirements related to the handling, storage, treatment and disposal of hazardous
and non-hazardous wastes. In the course of our operations, we generate petroleum product wastes and ordinary industrial
wastes that may be regulated as hazardous wastes. In addition, our operations also generate non-hazardous solid wastes,
which are regulated under RCRA and state laws. Historically, our environmental compliance costs under the existing
requirements of RCRA and similar state and local laws have not had a material adverse effect on our results of operations,
and the cost involved in complying with these requirements is not material.
We currently own or operate, and have in the past owned or operated, properties that for many years have been used
for refining and terminal activities. These properties in the past may have been operated by third parties whose treatment
and disposal or release of petroleum hydrocarbons and wastes were not under our control. Although we used operating and
disposal practices that were standard in the industry at the time, petroleum hydrocarbons or wastes have been released on
or under the properties owned or operated by us. These properties and the materials disposed or released on them may be
subject to CERCLA, RCRA and analogous state laws. Under such laws, we could be required to remove or remediate
previously disposed wastes or property contamination or to perform remedial activities to prevent future contamination.
In addition, new laws and regulations, amendment of existing laws and regulations, reinterpretation of legal
requirements, increased governmental enforcement or other developments could significantly increase our operational or
compliance expenditures.
Water Discharges
The Federal Water Pollution Control Act of 1972, as amended, also known as the federal Clean Water Act (“CWA”),
and analogous state laws impose restrictions and stringent controls on the discharge of pollutants, including oil, into
regulated waters. Such discharges are prohibited, except in accordance with the terms of a permit issued by the EPA or the
appropriate state agencies. Any unpermitted release of pollutants, including crude oil or hydrocarbon specialty oils as well
as refined products, could result in penalties, as well as significant remedial obligations. Spill prevention, control, and
countermeasure requirements of federal laws require appropriate containment berms and similar structures to help prevent
the contamination of navigable waters in the event of a petroleum hydrocarbon tank spill, rupture, or leak. Historically, our
environmental compliance costs under the existing requirements of the CWA and similar state laws have not had a material
adverse effect on our results of operations but these laws and their implementing regulations are subject to change and
there can be no assurance that such future costs will not be material.
The primary federal law for oil spill liability is the Oil Pollution Act of 1990, as amended (“OPA”), which addresses
three principal areas of oil pollution — prevention, containment and cleanup. The OPA applies to vessels, offshore
facilities and onshore facilities, including refineries, terminals and associated facilities that may affect waters of the
U.S. Under the OPA, responsible parties, including owners and operators of onshore facilities, may be subject to oil
cleanup costs and natural resource damages as well as a variety of public and private damages from oil spills. Historically,
our past environmental compliance costs under the existing requirements of the OPA have not had a material adverse effect
on our results of operations but this law and its implementing regulations are subject to change and there can be no
assurance that such future costs will not be material.
Occupational Health and Safety
We are subject to various laws and regulations relating to occupational health and safety, including the federal
Occupational Safety and Health Act, as amended (“OSH Act”), and comparable state laws. These laws and regulations
strictly govern the protection of the health and safety of employees. In addition, OSHA’s hazard communication standard,
the EPA’s community right-to-know regulations under Title III of CERCLA, and similar state statutes require that we
maintain information about hazardous materials used or produced in our operations and provide this information to
employees, contractors, state and local government authorities and customers. We maintain safety and training programs as
part of our ongoing efforts to ensure compliance with applicable laws and regulations. We conduct periodic audits of
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Process Safety Management (“PSM”) systems at each of our locations subject to the PSM standard. Our compliance with
applicable health and safety laws and regulations has required, and continues to require, substantial expenditures. Changes
in occupational safety and health laws and regulations or a finding of non-compliance with current laws and regulations
could result in additional capital expenditures or operating expenses, as well as civil penalties and, in the event of a serious
injury or fatality, criminal charges.
Other Environmental and Maintenance Items
We perform preventive and normal maintenance on our refining and terminal assets and make repairs and
replacements when necessary or appropriate. We also conduct inspections of these assets as required by law or regulation.
Insurance
Our operations are subject to certain hazards of operations, including fire, explosion and weather-related perils. We
maintain insurance policies, including business interruption insurance for each of our facilities, with insurers in amounts
and with coverage and deductibles that we, with the advice of our insurance advisors and brokers, believe are reasonable
and prudent. We cannot, however, ensure that this insurance will be adequate to protect us from all material expenses
related to potential future claims for personal and property damage or that these levels of insurance will be available in the
future at economical prices. We are not fully insured against certain risks because such risks are not fully insurable,
coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures.
Seasonality
The fuel and fuel related products that we manufacture, including asphalt products, are subject to seasonal demand and
trends. Asphalt demand is generally lower in the first and fourth quarters of the year, as compared to the second and third
quarters, due to the seasonality of the road construction and roofing industries we supply. Demand for gasoline and diesel
is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic
and agricultural activity. In addition, our natural gas costs can be higher during the winter months, as demand for natural
gas as a heating fuel increases during the winter. As a result, our operating results for the first and fourth calendar quarters
may be lower than those for the second and third calendar quarters of each year due to seasonality related to these and other
products that we produce and sell.
Properties
We own and lease the principal properties listed below. The principal properties which we own, as well as others not
listed below, are pledged as collateral under our Collateral Trust Agreement as discussed in Part II, Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Master Derivative Contracts and Collateral
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Trust Agreement.” We believe that all properties are suitable for their intended purpose, are being efficiently utilized and
provide adequate capacity to meet demand for the next several years.
Property
Business Segment(s)
Acres
Owned / Leased
Location
Shreveport facility
Specialty Products and
Solutions
240
Owned
Shreveport, Louisiana
Great Falls specialty
asphalt facility
Montana/Renewables
65
Owned
Great Falls, Montana
Montana Renewables
facility
Montana/Renewables
21
Owned / Leased (1)
Great Falls, Montana
Princeton facility
Specialty Products and
Solutions
208
Owned
Princeton, Louisiana
Cotton Valley facility
Specialty Products and
Solutions
77
Owned
Cotton Valley, Louisiana
Burnham terminal
Specialty Products and
Solutions
11
Owned
Burnham, Illinois
Karns City facility
Specialty Products and
Solutions
225
Owned
Karns City, Pennsylvania
Dickinson facility
Specialty Products and
Solutions
28
Owned
Dickinson, Texas
Missouri facility
Specialty Products and
Solutions
22
Owned
Louisiana, Missouri
Calumet Packaging facility
Performance Brands
10
Leased
Shreveport, Louisiana
Royal Purple facility
Performance Brands
20
Owned
Porter, Texas
(1)
Montana Renewables LLC, an unrestricted subsidiary of the Company, leases certain property from the Company.
In addition to the items listed above, we lease or own a number of storage tanks, railcars, warehouses, equipment, land,
crude oil loading facilities and precious metals.
Intellectual Property
Our patents relating to our refining operations are not material to us as a whole. Our patents include composition
patents that are integral to certain products in the Specialty Products and Solutions segment. We own, have registered or
have applied for registration of a variety of tradenames, service marks and trademarks for use in our business. The
trademarks, tradenames and design marks under which we conduct our branded business (including Penreco, Orchex,
Royal Purple, Bel-Ray and TruFuel) and other trademarks employed in the marketing of our products are integral to our
marketing operations. We also license intellectual property rights from third parties. We are not aware of any facts as of the
date of this filing which would negatively impact our continuing use of intellectual property or our licensed intellectual
property.
Office Facilities
In addition to our principal properties discussed above, as of December 31, 2024, we were a party to a number of
cancelable and noncancelable leases for certain properties, including our corporate headquarters in Indianapolis, Indiana.
The corporate headquarters lease is for 52,683 square feet of office space. The lease term expires in July 2035. Please read
Note 4 — “Leases” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial
Statements” of this Annual Report for additional information regarding our leases.
While we may require additional office space as our business expands, we believe that our existing facilities are
adequate to meet our needs for the immediate future and that additional facilities will be available on commercially
reasonable terms as needed.
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Human Capital Management
We believe that our employees are significant contributors to our success and the future success of our Company,
which depends on our ability to attract, retain and motivate qualified personnel. The skills, experience and industry
knowledge of key employees significantly benefit our operations and performance.
As of February 28, 2025, the Company employed approximately 1,620 people who provide direct support to our
operations. Of these employees, approximately 623 are covered by collective bargaining agreements.
Employees at the following locations are covered by the following separate collective bargaining agreements:
Facility
Union
Expiration Date
None of the employees at the Calumet Packaging facility, the Royal Purple facility or at the Burnham terminal are
covered by collective bargaining agreements. We consider our employee relations to generally be good, with no history of
work stoppages.
Compensation and Benefits
We have demonstrated a history of investing in our workforce by offering competitive salaries, fair wages and
comprehensive benefits. To foster a stronger sense of ownership and align the interests of our personnel with stockholders,
we provide short-term and long-term incentive programs that include short-term cash bonus awards under our Cash
Incentive Plan and restricted stock unit awards under our Long-Term Incentive Plan. Awards under these incentive
programs are subject to individual and company performance factors. Furthermore, we offer comprehensive benefits to our
full-time employees working 30 hours or more per week, including long-term disability coverage, comprehensive health
insurance, including vision and dental, employee Health Savings Accounts, including contributions to these accounts by us,
competitive paid time off and sick leave programs, and student loan repayment matching opportunities. In addition, we
provide a 401(k) retirement savings plan to assist our eligible employees in saving for their retirement. To be an employer
of choice and maintain the strength of our workforce, we consistently assess the current business environment and labor
market to refine our compensation and benefits programs and other resources available to our personnel.
Workforce Health and Safety
The safety of our employees is a core tenet of our values, and our safety goal is zero incidents and zero injuries. A
strong safety culture reduces risk, enhances productivity and builds a strong reputation in the communities in which we
operate. We have earned a reputation as a safe and an environmentally responsible operator through continuous
improvement in our safety performance. This makes us more attractive for current and new employees.
We invest in safety training and coaching, promote risk assessments and encourage visible safety leadership.
Employees are empowered and expected to stop or refuse to perform a job if it is not safe or cannot be performed safely.
We sponsor emergency preparedness programs, conduct regular audits to assess our performance and celebrate our
successes in which we acknowledge employees and contractors alike who have exhibited strong safety leadership during
Cotton Valley
International Union of Operating Engineers
November 19, 2026
Princeton
International Union of Operating Engineers
August 20, 2028
Dickinson
International Union of Operating Engineers
December 12, 2028
Shreveport
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-
Industrial and Service Workers International Union
April 30, 2026
Missouri
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-
Industrial and Service Workers International Union
April 30, 2025
Karns City
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-
Industrial and Service Workers International Union
January 31, 2027
Great Falls
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-
Industrial and Service Workers International Union
July 31, 2026
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the course of the year. These many efforts combine to create a culture of safety throughout the company and provide a
positive influence on our contractor community.
Inclusion and Workplace Culture
We are committed to maintaining a culture where inclusion and belonging are core philosophies across our operations,
including, but not limited to, our decisions around recruitment, promotion, transfer, leaves of absence, compensation,
opportunities for career support and advancement, job performance and other relevant job-related criteria. We embrace an
approach to hiring and advancement that considers the value of diversity, and we are also committed to making
opportunities for development and progress available to all employees so their talents can be fully developed to maximize
our and their success. We believe that creating an environment that cultivates a sense of belonging requires encouraging
employees to continue to educate themselves about each other’s experiences, and we strive to promote the respect and
dignity of all persons. We also believe it is important that we foster education, communication and understanding about
inclusion and belonging.
Address, Internet Website and Availability of Public Filings
Our principal executive offices are located at 1060 N Capitol Ave., Suite 6-401, Indianapolis, Indiana, 46204 and our
telephone number is (317) 328-5660. Our website is located at www.calumet.com.
Our Securities and Exchange Commission (“SEC”) filings are available on our website as soon as reasonably
practicable after we electronically file such material with, or furnish such material to, the SEC. We make available, free of
charge on our website, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on
Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). These documents are located on our website at www.calumet.com by
selecting the “Investor Relations” link, and then selecting the “Financial Reporting” link and then selecting the “SEC
Filings” link. We also make available, free of charge on our website, our charters for the Audit Committee, Compensation
Committee, Nominating and Governance Committee, Risk Committee, and Strategy and Growth Committee, and our Code
of Business Conduct and Ethics. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to
amendments to or waivers from any provision of the Code of Business Conduct and Ethics applicable to our executive
officers and directors by posting such information on our website. These documents are located on our website at
www.calumet.com by selecting the “Investor Relations” link, then selecting the “Governance” link, and then selecting
“Governance Documents.” All reports and documents filed with the SEC are also available via the SEC’s website,
www.sec.gov.
The above information is available to anyone who requests it and is free of charge either in print from our website or
upon request by contacting Investor Relations using the contact information listed above. Information on our website is not
incorporated into this Annual Report or our other securities filings and is not a part of them.
Item 1A. Risk Factors
An investment in our common stock involves a significant degree of risk. Before you invest in our common stock, you
should carefully consider the risk factors discussed or referenced below. If any of the risks discussed below were actually
to occur, our business, financial position or results of operations could be materially adversely affected.
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Risks Related to our Business
Results of Operations and Financial Condition
Our business depends on supply and demand fundamentals, which can be adversely affected by numerous
macroeconomic factors outside of our control and which may in turn impact our operational and financial
performance, including our ability to execute our business strategies in the expected time frame.
Such macroeconomic factors include:
●
reduction in the demand for, and the marketability of, our specialty products due to governmental regulations;
●
increased volatility in product margins;
●
the ability or willingness of our suppliers to provide raw materials, equipment, services or supplies for our
operations or otherwise fulfill their contractual obligations, which could reduce our production levels or otherwise
impact our ability to deliver refined or finished lubricant products timely or at all;
●
the ability or willingness of our customers to fulfill their contractual obligations or any material reduction in, or
loss of, orders or revenue from our customers;
●
occurrence of operational hazards, including terrorism, cyberattacks or domestic vandalism, as well as
information system failures or communication network disruptions;
●
increased cost and reduced availability of capital for growth or maintenance expenditures;
●
availability and operability of terminals, tankage and pipelines that store and transport our feedstocks and
products;
●
the amount of our borrowing base under our revolving credit facility and our ability to issue letters of credit or the
requirement that we post substantial amounts of credit support;
●
the impairment of our long-lived assets or goodwill, which could reduce our earnings;
●
the impact of any economic downturn, recession, inflationary pressures, increases in interest rates or other
disruptions of the U.S. and global economies and financial and commodity markets; and
●
political tensions, conflicts and war, such as the ongoing conflicts in Ukraine and the Middle East.
Our business has exposure to some commodities which are volatile, and a reduction in our margins will adversely
affect the amount of cash we will have available to operate our business and for payments of our debt obligations.
In many cases, specialty products are produced from intermediates that ultimately originate from crude oil. Typically,
we enjoy a cost advantage from processing crude oil into intermediates that are used as specialty feedstocks. This process
also creates fuels and other by-products, which carry a margin to crude prices. Typically, the total margin of fuels and other
by-products to crude oil is a positive, but in extreme demand scenarios this cost advantage can turn into a short-term
disadvantage. When the margin between product sales prices and feedstock costs tightens, our earnings, profitability and
cash flows are negatively impacted.
A widely used benchmark to track margins in the fuel products industry is the Gulf Coast 2/1/1 crack spread (“Gulf
Coast crack spread”), which represents the gross margin assuming that two barrels of a benchmark crude oil are converted,
or cracked, into one barrel of gasoline and one barrel of diesel. The Gulf Coast 2/1/1 crack spread ranged from a high of
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$31.42 per barrel to a low of $9.45 per barrel during 2024 and averaged $17.02 per barrel during 2024 compared to an
average of $31.64 in 2023.
Our actual fuels product margins may vary from the Gulf Coast crack spread due to the actual crude oil used and
products produced, transportation costs, regional differences, and the timing of the purchase of the feedstock and sale of the
refined products, but we use the Gulf Coast crack spread as an indicator of the volatility and general levels of fuels refining
margins.
Our specialty product margins are influenced by the price of our feedstocks, many of which are commodities. If
feedstock prices increase, our margins would fall unless we are able to pass through these price increases to our customers.
For example, during fiscal year 2022, higher material and feedstock costs adversely impacted our margins for our
Performance Brands segment.
Our hedging activities may not be effective in reducing our exposure to commodity price risk and may reduce our
earnings, profitability and cash flows.
From time to time, we utilize derivative financial instruments related to the future price of crude oil, natural gas and
refined products to manage expected outcomes involving commodity price risk. We typically do not enter into derivative
financial instruments to reduce our exposure to prices of the specialty products we sell as there is no established derivative
market for such products.
We limit our derivative transactions to only a portion of the volume of our expected purchase and sales requirements
and, as a result, we will continue to have direct commodity price exposure to the unhedged portion of our expected
purchase and sales requirements. Thus, we could be exposed to significant increases in commodity prices, which would
increase the cost for a portion of our feedstock purchases.
Our actual future purchase and sales requirements may be significantly higher or lower than we estimate at the time we
enter into derivative transactions for such period. If the actual amount is higher than we estimate, we will have greater
commodity price exposure than we intended. If the actual amount is lower than the amount that is subject to our derivative
financial instruments, we might be forced to satisfy all or a portion of our derivative transactions without the benefit of the
cash flow from our sale or purchase of the underlying physical commodity, which may result in a substantial diminution of
our liquidity. As a result, our hedging activities may not be as effective as we intend in reducing our exposure to price risk.
In addition, our hedging activities are subject to the risks that a counterparty may not perform its obligations under the
applicable derivative instrument, the terms of the derivative instruments are imperfect, and our risk management policies
and procedures are not properly followed. It is possible that the steps we take to monitor our derivative financial
instruments may not detect and prevent violations of our risk management policies and procedures, particularly if
deception or other intentional misconduct is involved.
Decreases in the price of inventory and products may lead to a reduction in the borrowing base under our revolving
credit facility and our ability to issue letters of credit or the requirement that we post substantial amounts of cash
collateral for derivative instruments, which could adversely affect our liquidity, financial condition and our ability to
make payments on our debt obligations.
We rely on borrowings and letters of credit under our revolving credit facility to purchase feedstocks for our facilities,
and to lease certain precious metals for use in our operations. The borrowing base under our revolving credit facility is
determined weekly or monthly depending upon availability levels or the existence of a default or event of default.
Reductions in the value of our inventories as a result of lower crude oil prices could result in a reduction in our borrowing
base, which would reduce the amount of financial resources available to meet our operating requirements. If, under certain
circumstances, our available capacity under our revolving credit facility falls below certain threshold amounts, or a default
or event of default exists, then our cash balances in a dominion account established with the administrative agent will be
applied on a daily basis to our outstanding obligations under our revolving credit facility. In addition, decreases in the price
of crude oil or increases in crack spreads may require us to post substantial amounts of cash collateral to our hedging
counterparties in order to maintain our derivative instruments. If, due to our financial condition or other reasons, the
borrowing base under our revolving credit facility decreases, we are limited in our ability to issue letters of credit or we
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are required to post substantial amounts of cash collateral to our hedging counterparties, our liquidity, financial condition
and our ability to make payments on our debt obligations could be materially and adversely affected. Please read Part II,
Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital
Resources — Debt and Credit Facilities” for additional information.
We depend on certain third-party pipelines for transportation of feedstocks and products, and if these pipelines
become unavailable to us, our revenues and cash available for payment of our debt obligations could decline.
Our Shreveport facility is interconnected to a pipeline that supplies a portion of its crude oil and a pipeline that ships a
portion of its refined fuel products to customers, such as pipelines operated by subsidiaries of Enterprise Products
Partners L.P. and Plains. Our Great Falls facility receives crude oil through the Front Range pipeline system via the Bow
River Pipeline in Canada. Since we do not own or operate any of these pipelines, their continuing operation is not within
our control.
The unavailability of any of these third-party pipelines for the transportation of crude oil or our refined fuel products,
because of acts of God, accidents, earthquakes or hurricanes, government regulation, terrorism or other third-party events,
could lead to disputes or litigation with certain of our suppliers or a decline in our sales, net income and cash available for
payments of our debt obligations.
The price volatility of utility services may result in decreases in our earnings, profitability and cash flows.
The volatility in costs of natural gas and other utility services, principally electricity, used by our facilities and other
operations affect our net income and cash flows. Natural gas and utility prices are affected by factors outside of our control,
such as supply and demand in both local and regional markets. Natural gas prices have historically been volatile.
For example, daily prices for natural gas as reported on the NYMEX ranged between $3.95 and $1.58 per million
British thermal unit (“MMBtu”) in 2024, and between $4.17 and $1.99 per MMBtu in 2023. Typically, electricity prices
fluctuate with natural gas prices. Future increases in natural gas and utility prices may have a material adverse effect on our
results of operations. However, international natural gas prices have been more volatile, and more expensive, than domestic
prices, which can provide a competitive advantage to domestic plants. This dynamic means that market product prices may
increase more than our utility costs, creating higher margins when natural gas and utility costs increase less than
international competitors’ utility prices. Natural gas and utility costs constituted approximately 10.3% and 15.4% of our
total operating expenses included in cost of sales for the years ended December 31, 2024 and 2023, respectively. As prices
and industry competitive dynamics change, it could adversely affect our profitability and the amount of cash available for
payments of our debt obligations.
Our facilities incur operating hazards, and the potential limits on insurance coverage could expose us to potentially
significant liability costs.
Our facilities are subject to certain operating hazards, and our cash flow from those operations could decline if any of
our facilities experience a major accident, pipeline rupture or spill, explosion or fire, is damaged by severe weather or other
natural disaster, or otherwise is forced to curtail its operations or shut down. These operating hazards could result in
substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment,
and pollution or other environmental damage. One or more of these developments may result in significant curtailment or
suspension of our related operations.
Although we maintain insurance policies, including personal and property damage and business interruption insurance
for each of our facilities, we cannot ensure that this insurance will be adequate to protect us from all material expenses
related to potential future claims for personal and property damage or significant interruption of operations. Our business
interruption insurance will not apply unless a business interruption exceeds 60 days. Furthermore, we may be unable to
maintain or obtain insurance of the type and amount we desire at reasonable rates. As a result of market conditions,
premiums and deductibles for certain of our insurance policies have increased and could escalate further. In some
instances, certain insurance could become unavailable or available only for reduced amounts of coverage. In addition, we
are not fully insured against all risks incident to our business because certain risks are not fully insurable, coverage is
unavailable,
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or premium costs, in our judgment, do not justify such expenditures. For example, we are not insured for all environmental
liabilities, including, but not limited to, product spills and other releases at all of our facilities. If we were to incur a
significant liability for which we are not insured or fully insured, it could affect our financial condition and diminish our
ability to make payments of our debt obligations.
Downtime for maintenance at our refineries and facilities will reduce our revenues and could limit our ability to
make payments of our debt obligations.
Our facilities consist of many processing units, a number of which have been in operation for extended periods of
time. One or more of the units have in the past required, and may in the future require, additional unscheduled downtime
for unanticipated maintenance or repairs that are more frequent than our scheduled turnaround for each unit every one to
five years. Scheduled and unscheduled maintenance reduce our revenues and increase our operating expenses during the
period of time that our processing units are not operating and could limit our ability to make payments of our debt
obligations.
An impairment of our long-lived assets or goodwill could reduce our earnings or negatively impact our financial
condition and results of operations.
We continually monitor our business, the business environment and the performance of our operations to determine if
an event has occurred that indicates that a long-lived asset or goodwill may be impaired. If an event occurs, which is a
determination that involves judgment, we may be required to utilize cash flow projections to assess our ability to recover
the carrying value based on the ability to generate future cash flows. Our long-lived assets and goodwill impairment
analyses are sensitive to changes in key assumptions used in our analysis, such as expected future cash flows, the degree of
volatility in equity and debt markets and our stock price. If the assumptions used in our analysis are not realized, it is
possible a material impairment charge may need to be recorded in the future.
We cannot accurately predict the amount and timing of any impairment of long-lived assets or goodwill. Further, as we
continue to develop our strategy regarding certain of our non-core assets, we will need to continue to evaluate the carrying
value of those assets. Any additional impairment charges that we may take in the future could be material to our results of
operations and financial condition.
Competition in our industry is intense, and an increase in competition in the markets in which we sell our products
could adversely affect our earnings and profitability.
We compete with a broad range of companies within our industry. Because of some of our competitors’ geographic
diversity, larger and more complex refineries, integrated operations and greater resources, some of our competitors may be
better able to withstand volatile market conditions, to obtain crude oil in time of shortage and to bear the economic risks
inherent in all areas of the refining industry.
In addition, we compete with other industries that provide alternative means to satisfy the energy and fuel
requirements of our industrial, commercial and individual consumers. The more successful these alternatives become as a
result of governmental regulations, technological advances, consumer demand, improved pricing or otherwise, the greater
the impact on pricing and demand for our products and our profitability. There are presently significant governmental and
consumer pressures to increase the use of alternative fuels in the United States. While in some areas of our business these
pressures are helpful, in other areas they can pose a significant risk.
We depend on unionized labor for the operation of many of our facilities. Any work stoppages or labor disturbances
at these facilities could disrupt our business and negatively impact our financial condition and results of operations.
Substantially all of our operating personnel at our Shreveport, Great Falls, Princeton, Cotton Valley, Karns City,
Dickinson and Missouri facilities are employed under collective bargaining agreements. If we are unable to renegotiate
these agreements as they expire, any work stoppages or other labor disturbances at these facilities could have an adverse
effect on our business and impact our ability to make payments of our debt obligations. In addition, employees who are not
currently represented by labor unions may seek union representation in the future, and any renegotiation of current
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collective bargaining agreements may result in terms that are less favorable to us. Furthermore, our actions or responses to
any such negotiations, labor disputes, strikes or work stoppages could negatively impact how we are perceived and the
impact on our reputation could have adverse effects on our business.
Our method of valuing inventory may result in decreases in net income.
The nature of our business requires us to maintain substantial quantities of inventories. Some of our inventory is
commodity based, providing us little control over the changing market value of these inventories. Because our inventory is
valued at the lower of cost or market (“LCM”) value, if the market value of our inventory were to decline to an amount less
than our cost, we would record a write-down of inventory and a non-cash charge to cost of sales. In periods of decreasing
crude oil or refined product prices, our inventory valuation methodology has resulted in and may in the future result in
decreases in net income.
We depend on key personnel for the success of our business and the loss of those persons could adversely affect our
business and our ability to make payments of our debt obligations.
The loss of the services of any member of senior management or key employee could have an adverse effect on our
business and reduce our ability to make payments of our debt obligations. Our success in hiring, attracting and retaining
senior management and other experienced and highly skilled employees will depend in part on our ability to provide
competitive compensation packages and a high-quality work environment and maintain a desirable corporate culture. We
may not be able to locate or employ on acceptable terms qualified replacements for senior management or other key
employees if their services were no longer available. We do not maintain any key-man life insurance.
We are subject to cybersecurity risks and other cyber incidents resulting in disruption.
Threats to information technology systems associated with cybersecurity risks and cyber incidents or attacks continue
to grow. We depend on information technology systems to run our business. In addition, our use of the internet, cloud
services and other public networks, exposes our business and that of other third parties with whom we do business to
cybersecurity threats. Geopolitical tensions or conflicts, such as ongoing conflict in Ukraine and the Middle East, may
further heighten the risk of cybersecurity incidents. Such incidents could lead to unauthorized access to data and systems,
intentional or inadvertent releases of confidential information, including personally identifiable information, corruption of
data and disruption of critical systems and operations. Despite the security measures we have in place and any additional
measures we may implement in the future, our facilities and systems, and those of our third-party service providers, could
be vulnerable to security breaches, computer viruses, ransomware attacks, phishing attacks, inadvertent data disclosures,
programming errors, human errors or malfeasance, acts of vandalism or other events. Moreover, these threats are constantly
evolving, thereby making it more difficult to successfully defend against them or to implement adequate preventive
measures. We may not have the current capability to detect certain vulnerabilities, or may not detect them in a timely
manner, which may allow those vulnerabilities to persist in our systems over long periods of time. During 2021, we
experienced a minor cybersecurity incident at one of our operating locations, which was effectively contained. Any
disruption of our systems or cybersecurity incident or event resulting in the misappropriation, loss or other unauthorized
disclosure of confidential information, whether by us directly or our third-party service providers, could damage our
reputation, expose us to the risks of litigation and liability or regulatory fines, penalties or intervention, disrupt our
business, require us to incur significant costs to remediate damage resulting from the incident or improve our information
technology systems, or otherwise affect our results of operations, which could materially and adversely affect our business,
results of operations or financial condition. In addition, as cybersecurity incidents continue to evolve in magnitude and
sophistication, and our reliance on digital technologies continues to grow, we have expended and expect to continue to
expend additional resources in order to continue to enhance our cybersecurity measures and to investigate and remediate
any digital systems, related infrastructure, technologies and network security vulnerabilities. While we carry cyber
insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will
continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to
any future claim.
We are also subject to an evolving landscape of laws and regulations in a range of jurisdictions governing the handling
of information and the operation of information systems, including those relating to privacy, cybersecurity and data
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protection. Costs associated with compliance with these laws and regulations may increase over time and failure to comply
with these obligations could result in investigations, litigation, fines, penalties, judgments or other proceedings which could
have a material impact on our financial results.
AI presents risks and challenges that can impact our business.
Artificial intelligence (“AI”) presents risks and challenges that could impact our business, including breaches of
privacy or security incidents related to the use of AI. We are integrating AI tools into our systems, and our third-party
service providers as well as our competitors may also develop or use such tools. AI may become more important to our
operations or to our future growth over time. There can be no assurance that we will realize the desired or anticipated
benefits, or any benefits, and we may not properly implement such technology. In addition, we or our AI service providers
may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection,
compliance, and transparency, among others, which could inhibit our or our service providers’ ability to maintain an
adequate level of functionality or service. Our service providers may also incorporate AI into their services without
disclosing such use to us, or fail to disclose risks presented by their use of AI. There is a risk that AI tools used by us or by
our service providers could produce inaccurate or unexpected results or behaviors that could harm our business, customers
or reputation. Our competitors or other third parties may incorporate AI in their business operations more quickly or more
successfully than we do, which may negatively impact our ability to compete effectively. Additionally, the complex and
rapidly evolving landscape around AI may expose us to claims, inquiries, demands and proceedings by private parties and
regulatory authorities and subject us to legal liability as well as reputational harm. New laws and regulations are being
adopted in various jurisdictions globally, including in the United States, and existing laws and regulations may be
interpreted in ways that would affect our business operations and the way in which we use AI. Any of these outcomes
could impair our ability to compete effectively, damage our reputation, result in the loss of our or our customers’ property
or information and/or materially adversely affect our business, financial condition and results of operations.
Customers and Suppliers
Our arrangement with J. Aron exposes us to J. Aron-related credit and performance risk as well as potential
refinancing risks.
In January 2024, the Partnership and J. Aron & Company (“J. Aron”) entered into a Monetization Master Agreement
(the “Master Agreement”), a related Financing Agreement (the “Financing Agreement”) and Supply and Offtake
Agreement (together with the Master Agreement and the Financing Agreement, the “Shreveport Supply and Offtake
Agreement”). Pursuant to the Shreveport Supply and Offtake Agreement, J. Aron agreed to, among other things, purchase
from the Company, or extend to the Company, financial accommodations secured by crude oil and finished products
located at our Shreveport facility and from time to time, up to maximum volumes specified for crude oil and categories of
finished products, subject to the Company’s repurchase obligations with respect thereto.
When we executed the Shreveport Supply and Offtake Agreement, the inventories associated with such agreement
were taken out of our revolving credit facility borrowing base. Should an early termination event occur, pursuant to the
terms of the Supply and Offtake Agreement, we would need to seek alternative sources of financing, such as putting the
inventory associated with the Shreveport Supply and Offtake Agreement back into our revolving credit facility, to meet our
obligation to repurchase the inventory at then current market prices. In addition, upon expiration of the Shreveport Supply
and Offtake Agreement, the cost of repurchasing the inventory may be at higher prices than we sold the inventory. If the
price of the applicable products is well above the price at which we sold the inventory, we would have to pay more for the
inventory than the price we sold the inventory for. If this is the case at the time of termination and we are unable to include
the inventory associated with the Shreveport Supply and Offtake Agreement in our borrowing base, we could suffer a
significant reduction in liquidity if J. Aron terminates the Shreveport Supply and Offtake Agreement and we have to
repurchase the inventories.
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Indebtedness; Financing
We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate
our business.
We had approximately $2.1 billion of outstanding indebtedness as of December 31, 2024, including $441.8 million of
indebtedness at MRL, an unrestricted subsidiary of the Company and for which the parent Company is not a guarantor. We
have availability for borrowings of approximately $116.1 million under our senior secured revolving credit facility. We
have the ability to incur additional debt, including the ability to borrow up to an aggregate principal amount of $650.0
million at any time, subject to borrowing base limitations, under our revolving credit facility. A tranche of the revolving
credit facility includes a $50.0 million senior secured first loaned in and last to be repaid out (“FILO”) revolving credit
facility. In addition, as of February 28, 2025, MRL had approximately $782 million of outstanding indebtedness under a
loan guarantee agreement (the “DOE Facility”) with the U.S. Department of Energy (“DOE”) and MRL has the ability to
draw additional tranches of up to $658 million from 2025 through the anticipated completion of this project in 2028.
Calumet is not a guarantor of MRL indebtedness. Our substantial indebtedness could adversely affect our results of
operations, business and financial condition, and our ability to meet our debt obligations. In addition, our level of
indebtedness could have important consequences to us, including the following:
●
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or
other purposes may be impaired, or such financing may not be available on favorable terms;
●
covenants contained in our existing and future credit and debt arrangements will require us to meet financial tests
that may affect our flexibility in planning for and reacting to changes in our business, including possible
acquisition opportunities;
●
we will need a substantial portion of our cash flow to make principal and interest payments on our indebtedness,
reducing the funds that would otherwise be available for operations, future business opportunities and payments
of our debt obligations;
●
our ability to execute our acquisition and divestiture strategy; and
●
our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a
downturn in our business or the economy in general.
Any of these factors could result in a material adverse effect on our business, financial conditions, results of
operations, business prospects and ability to satisfy our obligations under our senior notes, revolving credit facility and the
DOE Facility.
Our ability to service our indebtedness will depend upon, among other things, our future financial and operating
performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other
factors, some of which are beyond our control. If our operating results are not sufficient to service our current or future
indebtedness, we will be forced to take actions such as reducing or delaying our business activities, acquisitions,
investments and/or capital expenditures, selling assets, restructuring or refinancing our indebtedness, or seeking additional
equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all.
Please read Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations —
Liquidity and Capital Resources — Debt and Credit Facilities” for additional information regarding our indebtedness.
Our financing arrangements contain operating and financial provisions that restrict our business and financing
activities.
The operating and financial restrictions and covenants in our financing arrangements, including our revolving credit
facility, DOE Facility, indentures governing each series of our outstanding senior notes and master derivative contracts,
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do currently restrict, and any future financing agreements could restrict, our ability to finance future operations or capital
needs or to engage, expand or pursue our business activities, including restrictions on our ability to, among other things:
●
sell assets, including equity interests in our subsidiaries;
●
redeem or repurchase any subordinated debt and, in the case of the 9.25% Senior Secured First Lien Notes due
2029 (the “2029 Secured Notes”), our unsecured notes;
●
incur or guarantee additional indebtedness or issue preferred stock;
●
create or incur certain liens;
●
make certain acquisitions and investments;
●
redeem or repay other debt or make other restricted payments;
●
enter into transactions with affiliates;
●
enter into agreements that restrict distributions or other payments from our restricted subsidiaries to us;
●
create unrestricted subsidiaries;
●
enter into sale and leaseback transactions;
●
enter into a merger, consolidation or transfer or sale of assets, including equity interests in our subsidiaries; and
●
engage in certain business activities.
Our revolving credit facility also contains a springing financial covenant which provides that only if our availability to
borrow loans under the revolving credit facility falls below the sum of (a) the greater of (i) (x) 15% of the borrowing base
then in effect at any time that the refinery asset borrowing base component is greater than $0 and (y) 10% of the borrowing
base then in effect at any time that the refinery asset borrowing base component is equal to $0 and (ii) $45.0 million (which
amount is subject to certain increases) plus (b) the amount of FILO Loans (as defined in the Credit Agreement)
outstanding, then we will be required to maintain as of the end of each fiscal quarter a Fixed Charge Coverage Ratio (as
defined in the Credit Agreement) of at least 1.0 to 1.0. As of December 31, 2024, the Company was in compliance with all
covenants under the revolving credit facility.
Our existing indebtedness imposes, and any future indebtedness may impose, a number of covenants on us regarding
collateral maintenance and insurance maintenance. As a result of these covenants and restrictions, we will be limited in the
manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance
future operations or capital needs.
Our ability to comply with the covenants and restrictions in our revolving credit facility, the DOE Facility, our secured
hedge agreements and the indentures governing our senior notes may be affected by events beyond our control.
If market or other economic conditions deteriorate, our ability to comply with these covenants and restrictions may be
impaired. A failure to comply with the covenants, ratios or tests in our revolving credit facility, the DOE Facility, our
secured hedge agreements, the indentures governing our senior notes or any future indebtedness could result in an event of
default under our revolving credit facility, our secured hedge agreements, the indentures governing our senior notes or our
future indebtedness, which, if not cured or waived, could have a material adverse effect on our business, financial
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condition and results of operations. Among other things, in the event of any default on our indebtedness, our debt holders
and lenders:
●
will not be required to lend any additional amounts to us;
●
could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due
and payable;
●
could elect to require that all obligations accrue interest at the default rate, if such rate has not already been
imposed;
●
may have the ability to require us to apply all of our available cash to repay these borrowings;
●
may prevent us from making debt service payments under our other agreements, any of which could result in an
event of default under our notes; or
●
in the event of a default by us or our restricted subsidiaries, could foreclose on the collateral pledged pursuant to
the terms of the revolving credit facility or the indenture and security documents governing the 2029 Secured
Notes, respectively.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain,
sufficient funds to repay such indebtedness in full. Even if new financing were available, it may be on terms that are less
attractive to us than our then existing credit facility or it may not be on terms that are acceptable to us. In addition, our
obligations under our revolving credit facility are secured by a first priority lien on our accounts receivable, inventory and
substantially all of our cash; our obligations under our secured hedge agreements and the BP Purchase Agreement are
secured by a lien on certain of our real property, plant and equipment, fixtures, intellectual property, certain financial assets,
certain investment property, commercial tort claims, chattel paper, documents, instruments and proceeds of the forgoing
(including proceeds of hedge agreements); and the 2029 Secured Notes are secured by a first-priority lien on all of the
fixed assets that secure our obligations under our secured hedge agreements, and if we are unable to repay our indebtedness
under the revolving credit facility, the 2029 Secured Notes or satisfy the payment obligations under our secured hedge
agreements or the payment obligations under the BP Purchase Agreement or obtain waivers of such defaults, then the
lenders under our revolving credit facility, the counterparties to such agreements, and the holders of the 2029 Secured
Notes could seek to foreclose on these assets. Please read Part II, Item 7 “Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt and Credit Facilities,” “—
Short-Term Liquidity,” “— Long-Term Financing” and “— Master Derivative Contracts and Collateral Trust Agreement”
for additional information regarding our long-term debt.
An increase in interest rates will cause our debt service obligations to increase.
Borrowings under our revolving credit facility bears interest at a rate based on the daily Secured Overnight Financing
Rate (“SOFR”). As of December 31, 2024, we had $286.6 million outstanding borrowings under our revolving credit
facility and $45.4 million in standby letters of credit were issued under our revolving credit facility. The foregoing interest
rates are subject to adjustment based on fluctuations in daily SOFR or the prime rate, as applicable. An increase in the
interest rates associated with our floating-rate debt would increase our debt service costs and affect our results of
operations. In addition, an increase in interest rates could adversely affect our future ability to obtain financing or
materially increase the cost of any additional financing.
A change of control could result in us facing substantial repayment obligations under our revolving credit facility,
our senior notes, our secured hedge agreements, and our Supply and Offtake Agreement.
There is no restriction in our amended and restated certificate of incorporation or bylaws on the ability of us to enter
into a transaction which would trigger the change of control provisions of our revolving credit facility agreement, the
indentures governing our senior notes, our Collateral Trust Agreement, and our Supply and Offtake Agreement. Certain
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events relating to a change of control of us and our operating subsidiaries would constitute an event of default under our
revolving credit facility, our Collateral Trust Agreement and our Supply and Offtake Agreement. In addition, an event of
default under our revolving credit facility would likely constitute an event of default under the indentures governing our
senior notes, our master derivatives contracts and the BP Purchase Agreement. As a result, upon a change of control event,
we may be required to immediately repay the outstanding principal, any accrued interest on and any other amounts owed
by us under our revolving credit facility, the senior notes and the Supply and Offtake Agreement and the outstanding
payment obligations under our master derivatives contracts and the BP Purchase Agreement. The source of funds for these
repayments would be our available cash or cash generated from other sources and there can be no assurance that we would
have, or be able to obtain, sufficient funds to repay such indebtedness and other payment obligations in full.
In addition, our obligations under our revolving credit facility are secured by a first-priority lien on our accounts
receivable, inventory and substantially all of our cash; our 2029 Secured Notes are secured by a first-priority lien on all of
the fixed assets that secure our obligations under our secured hedge agreements; and our obligations under our master
derivatives contracts and the BP Purchase Agreement are secured by a first-priority lien on our and our subsidiaries’ real
property, plant and equipment, fixtures, intellectual property, certain financial assets, certain investment property,
commercial tort claims, chattel paper, documents, instruments and proceeds of the forgoing (including proceeds of hedge
agreements). If we are unable to repay our indebtedness under the revolving credit facility, the 2029 Secured Notes, or
satisfy the payment obligations under our master derivative contracts or the payment obligations under the BP Purchase
Agreement or obtain waivers of such defaults, then the lenders under our revolving credit facility, the holders of our 2029
Secured Notes, the derivative counterparties under our master derivative contracts and BP, respectively, would have the
right to foreclose on those assets, which would have a material adverse effect on us.
Capital Projects and Future Growth
We make capital expenditures in our facilities to maintain their reliability and efficiency. If we are unable to
complete capital projects at their expected costs and/or in a timely manner, or if the market conditions assumed in our
project economics deteriorate, results of operations or cash flows could be adversely affected.
Delays or cost increases related to the engineering, procurement and construction of new facilities, expansions (such as
the MaxSAFTM project), or improvements and repairs to our existing facilities and equipment, could have a material
adverse effect on our business, financial condition, results of operations or our ability to make payments on our debt
obligations. Such delays or cost increases may arise as a result of unpredictable factors in the marketplace, many of which
are beyond our control, including:
●
denial or delay in obtaining regulatory approvals and/or permits;
●
changes in government regulations, including environmental and safety regulations;
●
unplanned increases in the cost of equipment, materials or labor;
●
disruptions in transportation of equipment and materials;
●
severe adverse weather conditions, natural disasters or other events (such as equipment malfunctions, explosions,
fires or spills) affecting our facilities, or those of our vendors and suppliers;
●
shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;
●
market-related increases in a project’s debt or equity financing costs; and/or
●
nonperformance or declarations of force majeure by, or disputes with, our vendors, suppliers, contractors or sub-
contractors.
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Equipment, even if properly maintained, may require significant capital expenditures and expenses to keep it operating
at optimum efficiency.
Any one or more of these occurrences noted above could have a significant impact on our business or subject us to
significant cost overruns. If we were unable to make up the delays or to recover the related costs, or if market conditions
change, we may not realize the anticipated benefits of our capital projects and it could materially and adversely affect our
financial position, results of operations or cash flows and, as a result, our ability to make payments of our debt obligations.
From time to time, we may seek to divest portions of our business, which could materially affect our results of
operations and result in disruption to other parts of the business.
We may dispose of portions of our current business or assets, based on a variety of factors and strategic considerations,
consistent with our strategy of preserving liquidity and streamlining our business to better focus on the advancement of our
core business. We expect that any potential divestitures of assets will also provide us with cash to reinvest in our business
and repay indebtedness. These dispositions, together with any other future dispositions we make, may involve risks and
uncertainties, including disruption to other parts of our business, potential loss of employees, customers or revenue,
exposure to unanticipated liabilities or result in ongoing obligations and liabilities to us following any such divestiture. In
addition, any such divestitures may not yield the targeted improvements in our business. Any of the foregoing could
adversely affect our financial condition and results of operations or cash flows and, as a result, our ability to make
payments of our debt obligations.
Environmental and Regulatory Matters
We may incur significant environmental remediation costs and liabilities in the operation of our refineries,
facilities, terminals and related facilities.
The operation of our refineries, blending and packaging sites, terminals, and related facilities subject us to the risk of
incurring significant environmental remediation costs and liabilities due to our handling of petroleum hydrocarbons and
wastes or hazardous substances or wastes, because of air emissions and water discharges related to our operations and
activities, and as a result of historical operations and waste disposal practices at our facilities or in connection with our
activities, some of which may have been conducted by prior owners or operators. We could incur significant remedial costs
in the cleanup of any petroleum hydrocarbons or wastes or hazardous substances or wastes that may have been released on,
under or from the properties owned or operated by us. While we believe we have adequately reserved for these
possibilities, such costs and liabilities are difficult to predict and could exceed the amount reserved.
Some environmental laws may impose joint and several, strict liability for releases of petroleum hydrocarbons and
wastes or hazardous substances or wastes, which means in some situations, we could be exposed to liability as a result of
our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third
parties. Private parties, including the owners of properties adjacent to our operations and facilities where our petroleum
hydrocarbons or wastes or hazardous substances or wastes are taken for reclamation or disposal, may also have the right to
pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental laws and
regulations or for personal injury or property damage. We may not be able to recover some or any of these costs from
insurance or other sources of indemnity. To the extent that the costs associated with meeting any or all of these
requirements are significant and not adequately secured or indemnified for, there could be a material adverse effect on our
business, financial condition and results of operations or cash flows and, as a result, our ability to make payments of our
debt obligations.
We are subject to operational compliance with stringent environmental and occupational health and safety laws
and regulations that may expose us to significant costs and liabilities.
Our refining, blending and packaging site, terminal and related facility operations are subject to stringent federal,
regional, state and local laws and regulations governing worker health and safety, the discharge of materials into the
environment and environmental protection. These laws and regulations impose legal requirements that are applicable to our
operations, including the obligation to obtain permits to conduct regulated activities, the incurrence of significant
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capital expenditures for air pollution control equipment to limit or prevent releases of pollutants from our facilities, the
expenditure of significant monies in the application of specific health and safety criteria addressing worker protection, the
requirement to maintain information about hazardous materials used or produced in our operations and to provide this
information to required parties, and the incurrence of significant costs and liabilities for pollution resulting from our
operations or from those of prior owners or operators of our facilities. Numerous federal and state governmental
authorities, such as the U.S. EPA, OSHA and the Louisiana Department of Environmental Quality (“LDEQ”), have the
power to enforce compliance with these laws and regulations and the permits issued under them, often requiring
challenging and costly actions. From time to time, we receive notices of violation, other enforcement proceedings and
regulatory inquiries from governmental agencies alleging non-compliance with applicable environmental and occupational
health and safety laws and regulations. Failure to comply with such laws and regulations as well as any issued permits and
orders may result in the assessment of administrative, civil, and criminal sanctions, including monetary penalties, the
imposition of remedial or corrective action obligations or the incurrence of capital expenditures, the occurrence of delays
or cancellations in the permitting, development or expansion of projects, litigation, and the issuance of injunctions limiting
or preventing some or all of our operations.
New worker safety and environmental laws and regulations, revised interpretations of such existing laws and
regulations, increased governmental enforcement or other developments could require us to make additional, unforeseen
expenditures. The adoption of more stringent environmental laws or regulations could impact us by requiring installation of
new emission controls on some of our equipment, resulting in longer permitting timelines, and significantly increasing our
capital expenditures and operating costs, which could adversely impact our business, cash flows and results of operation.
Please read Items 1 and 2 “Business and Properties — Environmental and Occupational Health and Safety Matters” for
additional information.
The availability and cost of renewable identification numbers and results of litigation related to our SRE petitions
could have a material adverse effect on our results of operations and financial condition and our ability to make
payments on our debt obligations.
Under the RFS provisions of the Clean Air Act, the EPA sets or adjusts volume mandates for the percentages of four
compliance categories—cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel—to be
blended into gasoline and diesel produced or imported during each calendar year. Most recently, the EPA has established
these volume mandates for RFS program years 2023, 2024 and 2025 under final rules published in June 2023. We, and
other refiners subject to RFS requirements, may meet those requirements by blending the necessary volumes of renewable
transportation fuels into our production. To the extent that refiners cannot blend renewable fuels in the quantities required,
those refiners may purchase renewable credits, referred to as RINs, which are created by blending done by others.
Our Shreveport and Great Falls refineries produce transportation fuels subject to the RFS volume mandates. Our
annual RINs Obligation, which includes RINs that are required to be secured through either our own blending or through
the purchase of RINs in the open market, is approximately 65 million RINs across the four compliance categories.
However, the EPA granted certain of our refineries the small refinery exemption (“SRE”) provided by the RFS in
past years including, most recently, for the 2018 program year. Refineries that receive a SRE are not subject to the RFS
renewable blending requirements for the corresponding calendar year. We have submitted SRE petitions for our Shreveport
and Great Falls refineries for multiple program years, including 2018, 2019, 2020, 2021, 2022, 2023 and 2024. Refer to
Note 2 — “Summary of Significant Accounting Policies” under Part II, Item 8 “Financial Statements — Notes to
Consolidated Financial Statements” for additional information relating to the status of SRE petitions for specific
compliance years.
We cannot predict the final outcome of these matters or whether they may result in increased RFS program compliance
costs. Moreover, the price of RINs remains subject to extreme volatility, with the potential for significant increases in price
driven by political decisions rather than fundamentals. There also continues to be a shortage of advanced biofuel
production resulting in increased difficulties meeting the original RFS program mandates. Our refineries produce a higher
ratio of diesel than national averages, and since ethanol cannot be blended into diesel we therefore have a more difficult
“compliance pathway” than average. The inability to receive an exemption under the RFS program for one or more of our
refineries; any increase in the final minimum volumes of renewable fuels that must be blended with refined petroleum
fuels; and/or any increase in the cost to acquire RINs may, individually or in the aggregate, have the potential to result in
significant costs in connection with RIN compliance, which costs could be material.
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Refer to Note 2 — “Summary of Significant Accounting Policies” under Part II, Item 8 “Financial Statements —
Notes to Consolidated Financial Statements” for further information. Our involvement in such litigation may strain our
resources, increase our costs and distract management, even if we are successful at certain stages. As long as the final
outcome of our SRE petitions remains uncertain, we expect to carry a RINs liability on our consolidated balance sheets and
any changes to such liability will be recognized as a charge or credit to net income (loss). As a result of such charges,
investors may have a negative outlook on our financial position regardless of the actual impact these charges have on our
business.
Our and our customers’ operations are subject to risks arising out of the threat of climate change, including
regulatory, political, litigation and financial risks, which could result in increased operating and capital costs for our
customers and reduced demand for the products and services we provide.
The threat of climate change continues to attract considerable attention in the United States and foreign countries. As a
result, numerous proposals have been made and are likely to continue to be made at the international, national, regional and
state levels of government to monitor and limit emissions of GHGs as well as to eliminate such future emissions. As a
result, our operations and potentially the operations of our customers are subject to a series of regulatory, political,
physical, litigation and financial risks associated with the production and processing of fossil fuels and emissions of GHGs.
Please see Items 1 and 2 “Business and Properties — Environmental and Occupational Health and Safety Matters” for
more discussion on the threat of climate change and restriction of GHG emissions.
The adoption and implementation of any international, federal, regional or state executive actions, legislation,
regulations or other regulatory initiatives that impose more stringent standards for GHG emissions or put a price on GHG
emissions could result in increased compliance costs, additional operating restrictions or reduced demand for some of our
services and products. Additionally, regulators in Europe and the U.S. have also focused efforts on increased disclosure
related to climate change and mitigation efforts, which may significantly increase compliance burdens and associated
regulatory costs and complexity. Further, increasing concentrations of GHGs in the Earth’s atmosphere may produce
climatic changes that have significant physical effects, such as increased frequency and severity of storms, floods, wildfires
and other climatic events. If any such effects were to occur, they could have an adverse effect on our operations or the
operations of our suppliers and customers and result in more frequent and severe disruptions to our business and those of
our suppliers and customers, increased costs to repair damaged facilities or maintain or resume operations, and increased
insurance costs. Increasing attention to the risks of climate change has also resulted in an increased possibility of lawsuits
or investigations brought by public and private entities against companies in the oil and natural gas sector in connection
with their greenhouse gas emissions. While we do not produce oil or natural gas, if we were to be targeted by any such
litigation or investigations, we may incur liability, which, to the extent that societal pressures or political or other factors
are involved, could be imposed without regard to the causation of or contributions to the asserted damage, or to mitigating
factors.
There are also increasing financial risks if stockholders and bondholders concerned about the potential effects of
climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.
Additionally, the lending and investment practices of institutional lenders have been the subject of intensive lobbying
efforts in recent years pressuring such lenders to not to provide funding for oil and natural gas producers. While we do not
produce oil or natural gas, such developments could affect our cost and access to capital. Similarly, political, physical,
financial and litigation risks may result in certain companies engaged in the oil and natural gas production business
restricting, delaying or canceling production activities, incurring liability for infrastructure damages as a result of climatic
changes, or impairing the ability to continue to operate in an economic manner, which also could reduce demand for our
products and services.
The occurrence of one or more of these developments could have a material adverse effect on our business, financial
condition, results of operations and cash flows. Moreover, the increased competitiveness of alternative energy sources
(such as wind, solar, geothermal and tidal), as well as any regulatory or other incentives to conserve energy, could reduce
demand for hydrocarbons and therefore for our products, which could lead to a reduction in our revenues and cash flow
available for payments on our debt obligations. For example, the Inflation Reduction Act of 2022 contains tax inducements
and other provisions that incentivize investment, development, and deployment of alternative energy sources and
technologies.
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We could incur substantial costs or disruptions in our business if we cannot obtain or maintain necessary permits
and authorizations or otherwise comply with occupational, environmental and other laws and regulations.
Our operations require numerous permits and authorizations under various occupational, environmental and other laws
and regulations. These authorizations and permits are subject to revocation, renewal or modification and can require
operational changes to limit impacts or potential impacts on the environment and/or the health or safety of workers. New
policy objectives and regulatory initiatives pursued under the Biden Administration as well as changes in leadership or
priorities at the state level may result in more stringent conditions with respect to the acquisition of these authorizations
and permits. Additionally, a violation of an authorization or permit conditions or other legal or regulatory requirements
could result in substantial fines, criminal sanctions, permit revocations, injunctions and/or facility shutdowns. Any or all of
these matters could have a negative effect on our business, results of operations and cash flow available for payments on
our debt obligations.
Subsidiaries
We have a holding company structure in which our subsidiaries conduct our operations and own our operating
assets and our ability to make payments of our debt obligations depends on the performance of our subsidiaries and
their ability to distribute funds to us.
We are a holding company, and our subsidiaries conduct all of our operations and own all of our operating assets. We
have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to make payments of
debt obligations depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our
subsidiaries to make distributions to us is restricted by our revolving credit facility and the indentures governing our senior
notes and may be restricted by, among other things, applicable state laws and other laws and regulations. If we are unable
to obtain the funds necessary to make payments of debt obligations, we may be required to adopt one or more alternatives,
such as a refinancing our indebtedness or incurring borrowings under our revolving credit facility. We cannot assure
stockholders that we would be able to refinance our indebtedness or that the terms on which we could refinance our
indebtedness would be favorable.
Risks Related to Montana Renewables
If there is not sufficient demand for renewable energy, if renewable energy markets do not develop or take longer to
develop than we anticipate, or if we do not realize the expected SAF premium, we may be unable to achieve our
investment objectives for MRL, which could have a material adverse impact on our results of operations and financial
condition.
If demand for renewable energy fails to grow sufficiently, we may be unable to achieve our business objectives for
MRL. Many factors will influence the widespread adoption of renewable energy and demand for renewable energy
projects, including:
●
cost-effectiveness of renewable energy technologies as compared with conventional and competitive
technologies;
●
performance and reliability of renewable energy products as compared with conventional and non-renewable
products;
●
fluctuations in economic and market conditions that impact the viability of conventional and competitive
alternative energy sources;
●
increases or decreases in the prices of oil, coal and natural gas; and
●
availability or effectiveness of government subsidies, incentives and mandates.
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We also face the risks that SAF cannot generate the premium we currently expect, that a market for SAF does not
evolve as expected and that alternate technologies supersede the expected demand for SAF. Any of these factors may
preclude us from achieving our investment objectives for MRL and, by extension, could have a material adverse impact on
our results of operations and financial condition.
Montana Renewables is subject to numerous operating risks, which could materially adversely impact our results of
operations and financial conditions.
Montana Renewables was formed in 2021 and has a limited operating history, as Montana Renewables has only been
distributing renewable fuels since December 2022. The Company is experienced in operating facilities, such as the
Montana Renewables facility, and expects to continue to leverage the Company’s operating experience, as well as its
experience in selling and distributing renewable fuels.
As with any facilities of similar size and nature, the operations of Montana Renewables could be affected by many
factors, including start-up problems, the breakdown or failure of equipment or processes, the performance of Montana
Renewables below expected levels of output or efficiency, renewable feedstock or utility supply disruptions, rail service
disruptions, environmental proceedings or other litigation that compel cessation of all or a portion of the operations, cyber-
security considerations, increased stringent environmental operating, storage and transportation regulations, and/or, labor
disputes. Additionally, the operations of Montana Renewables could be affected by both natural or man-made catastrophic
events beyond our control, such as fires, earthquakes, floods, severe storms, extreme temperatures, explosions, major
accidents, armed conflict, hostilities, acts of terrorism, health emergencies, cyber and physical attacks and/or similar
events.
The occurrence of such events could significantly reduce or eliminate revenues generated by Montana Renewables and
significantly increase the expenses of Montana Renewables, thereby jeopardizing the ability of Montana Renewables to
generate revenues sufficient to pay its outstanding debt obligations. While Montana Renewables Holdings LLC (“MRHL”)
maintains insurance to protect against certain of these operating risks, the proceeds of such insurance may not be adequate
to cover Montana Renewable’s lost revenues or increased costs. Under such circumstances, no assurance can be given
concerning the ability of Montana Renewables to generate sufficient revenues to make timely payments of its debt
obligations.
MRHL may also face civil liabilities or fines in the ordinary course of its business as a result of damages to third
parties. These liabilities may result in MRHL making indemnification payments in accordance with applicable laws to the
extent and in the amount that such indemnification payments are not covered by MRHL’s insurance policies.
MRHL may be unable to attract and retain qualified managers and skilled employees to operate Montana Renewables’
facilities efficiently which could adversely affect the operations, cash flows and liquidity of Montana Renewables. The
renewable fuels business requires a highly specialized workforce, and accordingly, it can be difficult to find qualified and
affordable personnel. Additionally, labor expenses may increase as a result of a shortage in the supply of skilled personnel
and MRHL may be forced to incur significant training expenses if unable to hire employees with the requisite skills.
Substantially all operating personnel at Montana Renewables are employed under a collective bargaining agreement. If
MRHL is unable to renegotiate this agreement as it expires, any work stoppages or other labor disturbances could have an
adverse effect on the operations of Montana Renewables and MRHL’s ability to pay outstanding debt obligations.
During the start-up of operations or expansion of operations, new facilities like Montana Renewables could be
susceptible to operational failures which may result in temporary maintenance shutdowns. Although the initial
commissioning of the facility was successful, any significant curtailing of production at Montana Renewables may result in
materially lower levels of revenues or cash flows and materially increased expenses for the duration of any downtime and
may materially adversely impact our results of operations, financial conditions and ability to pay the principal of,
redemption premium, if any, and/or interest on outstanding debt obligations.
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Montana Renewables is subject to a number of statutes and regulations that could have an adverse effect on
Montana Renewables’ operations.
We are required to comply with a number of statutes and regulations relating to the environment and the safety and
health of our employees and the public during the operation of our Montana Renewables facility, such as: limits on noise
emissions from the Montana Renewables facility; safety and health standards, practices and procedures applicable to the
operation of the Montana Renewables facility; environmental protection requirements, including standards and limits
relating to the discharge of pollutants and waste to the air, water and land; and employment, hiring and anti-discrimination
requirements relating to the operation of the Montana Renewables facility.
Federal, state, and local laws and regulations protecting the environment require us to obtain permits and other
authorizations to operate the Montana Renewables facility. Changes in such laws could materially and adversely affect our
costs. Permits that have been obtained or will be obtained may be subject to challenge in public proceedings, including the
filing of administrative or judicial appeals contesting the validity or the terms of the permits. If such permits are
challenged, the operation of the Montana Renewables facility may be delayed or prohibited, and elements of our Montana
Renewables facility may need to be removed, redesigned or replaced.
All permits and approvals issued by governmental agencies expire and must be renewed if the permitted activity is not
complete. Renewals of operating permits require ongoing compliance and may result in new requirements being imposed
by governmental agencies. There is no assurance that required renewals will be obtained when required to continue
operation or that the Montana Renewables facility will be able to satisfy the requirements for renewal or continued
operation. The inability to maintain required permits in force and effect, and their amendment, suspension or revocation
would have adverse effects on the Montana Renewables facility’s operations and our financial performance.
A significant component of our product margin consists of a variety of government subsidies, incentives and
mandates, and any changes in law that eliminate or reduce these subsidies, incentives and mandates would have a
material adverse impact on our results of operations and financial condition.
As with many producers, our margins are supported by federal, state and provincial government programs that
incentivize the production, blending and use of renewable and low-carbon fuels. While the general trend over time has
been for these programs to expand both in number and scope, such continued growth is not guaranteed and is subject to
potential changes in political and public support. For example, since the enactment of the U.S. blender’s tax credit (Section
40A of the IRC) in 2004 with specified sunset dates, there have been several occasions where the renewal and extension of
the credit has been in doubt, only for it to be renewed and extended close to (and in some cases, after) expiration. Many
factors affect political and public support, which cannot be fully evaluated or predicted at this time.
In addition, programs that enjoy political and public support may nonetheless evolve over time in ways that may limit
opportunities for our renewable transportation fuel. For example, in September 2020, California Governor Gavin Newsom
issued Executive Order N-79-20, establishing goals of 100% of new passenger vehicle sales in-state to be zero-emission by
2035, and all heavy-duty truck sales to be zero-emission by 2045. The order further directs the California Air Resources
Board to develop regulations to achieve these goals. While the precise nature of future regulations cannot be predicted, it is
possible that incentives for renewable fuel products may be scaled back or more stringent emission reduction standards
may be adopted to facilitate the transition to zero-emission vehicles. These and similar initiatives reflect an ever evolving
legal and regulatory landscape, which introduces uncertainty in evaluating future governmental support for our products.
Certain regulatory programs feature a periodic update process. The U.S. Renewable Fuel Standard program, for
example, has historically required EPA to set RVOs each year, in light of volumes of four categories of renewable fuels
established by Congress in the Clean Air Act. More recently, EPA promulgated regulations setting RVOs for a three-year
period (2023, 2024 and 2025). The periodic update process featured in the RFS and similar programs nonetheless
introduces a degree of uncertainty in demand for our products on a yearly basis.
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Transactions between the Company and MRL present possible conflicts of interest that could have an adverse effect
on the Company if they are not managed appropriately.
MRHL has no assets other than its equity interests in MRL. Several of the Company’s affiliates have been or are
expected to be involved with the operation of Montana Renewables, including the sales and marketing of the renewable
fuels produced by Montana Renewables. The support and experience of the Company’s affiliates are expected to be
important to the success of Montana Renewables. However, no affiliates of the Company are obligated to make any
payments with respect to outstanding debt obligations of MRHL or MRL and any such transactions between the Company
and MRHL or MRL present possible conflicts of interest that could have an adverse effect on the Company if they are not
managed appropriately.
Montana Renewables depends on the Company to provide MRL with services necessary to operate its business. If
the Company were unable or unwilling to provide these services, it would result in a disruption in MRL’s business that
could have an adverse effect on its financial position, financial results and cash flow.
MRL does not directly employ directors, officers or employees. Pursuant to the master services agreement (the
“MSA”) with a wholly-owned subsidiary of the Company, all of MRL’s executive management personnel are employees of
the Company, and MRL uses a significant number of the Company’s employees to operate the Montana Renewables
facility and provide MRL with general and administrative services as well as services related to information technology,
cybersecurity and data privacy. The failure of the Company to provide accurate and timely service may adversely impact
MRL’s business operations. In addition, if the Company were to become unable or unwilling to provide such services,
MRL would need to develop these services internally or arrange for the services from another service provider, which may
not be possible and which could take time and cause MRL to experience significant interruptions or incur additional costs.
Developing the capabilities internally or by retaining another service provider could have an adverse effect on MRL’s
business, and the services, when developed or retained, may not be of the same quality as provided to us by the Company.
For example, if MRL is not able to obtain adequate information technology and cybersecurity services, MRL may be at a
higher risk for cyberattacks and other interruptions or failures. Additionally, if the MSA were to terminate, MRL would
lose its key personnel.
Increases to the cost of transportation services or equipment related to our feedstock materials and renewable
transportation fuels could materially and adversely affect our sales revenues and cost of operations.
We rely on railroad and trucking companies to transport renewable feedstock materials to the Montana Renewables
facility, and to deliver renewable transportation fuels to our customers. These transportation services are subject to various
hazards, including extreme weather conditions, floods, droughts, work stoppages, delays, accidents such as spills and
derailments and other accidents and other operating hazards. Increasing climate risk may exacerbate weather conditions so
as to materially affect the economics of traditional transportation methods. These transportation operations, equipment and
services are also subject to environmental, safety, and regulatory oversight. Due to concerns related to accidents, local and
national governments could implement new regulations affecting the transportation of our renewable feedstock materials or
renewable transportation fuels. We may be unable to ship the renewable transportation fuels or obtain renewable feedstock
materials as a result of these transportation companies’ failure to operate properly, or if new and more stringent regulatory
requirements are implemented affecting transportation operations or equipment. If there are significant increases in the cost
of such transportation services or equipment, or changes in such costs relative to transportation costs incurred by
competitors, our sales revenues and/or cost of operations could be materially and adversely affected.
Montana Renewable’s operations are dependent on the use of intellectual property licensed to MRL by third parties,
and if MRL fails to comply with our obligations under such license agreements, we may be required to pay damages,
and we could lose license rights that are critical to our business.
Montana Renewable’s operations are dependent upon the use of intellectual property licensed to us by third parties,
and in the future, MRL may enter into additional agreements for certain other intellectual property or technologies. If MRL
fails to comply with terms of its license agreements related to such intellectual property or other technologies, the
applicable licensor may have the right to terminate its license or MRL may be required to pay damages. Termination by the
licensor may cause MRL to lose valuable rights and could prevent MRL from operating the Montana Renewables
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facility or otherwise operating its business. Our business may suffer if any current or future licenses terminate, if the
licensors fail to abide by the terms of the license, if the licensors fail to enforce licensed patents against infringing third
parties, if the licensed intellectual property rights are found to be invalid or unenforceable, or if we are unable to enter into
necessary licenses on acceptable terms. In addition, our rights to the licensed intellectual property are licensed to us on a
non-exclusive basis. The owners of these non-exclusively licensed technologies are therefore free to license them to third
parties, including our competitors, on terms that may be superior to those offered to us, which could place us at a
competitive disadvantage. Moreover, our licensors may own or control intellectual property that has not been licensed to us
and, as a result, we may be subject to claims, regardless of their merit, that we are infringing, misappropriating or
otherwise violating the licensor’s rights. In addition, the agreements under which we license intellectual property or
technology from third parties are generally complex, and certain provisions in such agreements may be susceptible to
multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we
believe to be the scope of our rights to the relevant licensed intellectual property or technology or increase what we believe
to be our financial or other obligations under the relevant agreement. Failure to obtain, maintain or renew these licenses,
along with any of the foregoing, could have a material adverse effect on our ability to operate the Montana Renewables
facility.
The production of renewable fuels is a growing industry and we are expecting to encounter significant competition
in the marketplace.
The production of renewable fuels is a growing industry and we are expecting to encounter significant competition in
the marketplace. Emerging trends that develop as industry production of renewable fuels increases may adversely affect
our business, financial condition, results of operations and prospects. We have encountered and will continue to encounter
risks and difficulties frequently experienced by growing companies in rapidly changing industries, including unpredictable
and volatile revenues and increased expenses as our business continues to grow. In addition, new technologies or methods
of operation may be developed that improve the quality of the fuel, increase production, or decrease the costs of
production.
Montana Renewables balance sheet includes a Loan Guarantee Agreement (the “LGA”) with the US Government.
On January 10, 2025, Montana Renewable and the U.S. Department of Energy entered into a Loan Guarantee
Agreement whereby Montana Renewables may borrow from the Federal Finance Bank of the US Treasury, and DOE will
guarantee repayment of that indebtedness (the “DOE Loan”). Calumet is not a guarantor. On January 28, 2025 MRL drew a
first advance of approximately $782 million at a 15-year tenor and an interest rate of 4.884%. The LGA gives DOE the
right to approve certain activities which may limit MRL freedom of action or conflict with stockholder interests. Should
MRL default under the LGA the repayment of MRL indebtedness would be accelerated.
Risks Related to Our Common Stock
The price of our common stock may experience volatility.
The price of our common stock may be volatile. In addition to the risk factors described above, some of the factors that
could affect the price of our common stock are quarterly increases or decreases in revenue or earnings, changes in revenue
or earnings estimates by the investment community, sales of our common stock by significant stockholders, short-selling of
our common stock by investors, issuance of a significant number of shares to raise additional capital to fund our
operations, changes in market valuations of similar companies and speculation in the press or investment community about
our financial condition or results of operations. General market conditions and U.S. or international economic factors and
political events unrelated to the performance of us may also affect our stock price. For these reasons, investors should not
rely on recent trends in the price of our common stock to predict the future price of our common stock or our future
financial results.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that
may make it more difficult for a third party to acquire control of us, even if a change in control would result in the
purchase of your shares of common stock at a premium to the market price or would otherwise be beneficial to you.
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There are provisions in our amended and restated certificate of incorporation and amended and restated bylaws that
may make it more difficult for a third party to acquire control of us, even if a change in control would result in the purchase
of your shares of common stock at a premium to the market price or would otherwise be beneficial to you. For example,
our amended and restated certificate of incorporation authorizes our board of directors to issue preferred stock without
stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to
acquire us.
In addition, provisions of our amended and restated certificate of incorporation and amended and restated bylaws,
including a classified board of directors, so that only approximately one-third of our directors are elected each year, and
limitations on stockholder actions by written consent and on stockholder proposals and director nominations at meetings of
stockholders, could make it more difficult for a third party to acquire control of us. Certain provisions of the Delaware
General Corporation Law (“DGCL”) may also discourage takeover attempts that have not been approved by our board of
directors.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as
the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and
the federal district courts as the exclusive forum for Securities Act claims, which could limit stockholders’ ability to
obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers,
employees or agents.
Our amended and restated certificate of incorporation provides that, unless we select or consent in writing to the
selection of an alternative forum, all complaints asserting any internal corporate claims (defined as claims, including claims
in the right of the Company: (i) that are based upon a violation of a duty by a current or former director, officer, employee
or stockholder in such capacity; or (ii) as to which the DGCL confers jurisdiction upon the Court of Chancery), to the
fullest extent permitted by applicable law, and subject to applicable jurisdictional requirements, shall be the Court of
Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another
state court or a federal court located within the State of Delaware). Further, unless we select or consent to the selection of
an alternative forum, the federal district courts of the United States will be the exclusive forum for the resolution of any
complaint asserting a cause of action arising under the Securities Act. Our choice of forum provision does not apply to
suits brought to enforce any liability or duty created by the Exchange Act and investors cannot waive compliance with the
federal securities laws and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring any
interest in shares of our common stock will be deemed to have notice of, and consented to, the provisions of our amended
and restated certificate of incorporation described in the preceding sentence. This choice of forum provision may limit a
stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors,
officers, employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court
were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in
respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with
resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of
operations.
We do not expect to pay dividends on our common stock for the foreseeable future.
We do not expect to pay dividends for the foreseeable future. In addition, our revolving credit facility may prohibit us
from paying any dividends without the consent of the lenders under our revolving credit facility.
The value of our common stock may be diluted by future equity issuances (including upon the exercise of the
outstanding warrants), and shares eligible for future sale may have adverse effects on our share price.
We cannot predict the effect of future sales of shares or the availability of shares for future sales, on the market price of
or the liquidity of the market for the shares of our common stock. Sales of substantial amounts of shares of our common
stock, or the perception that such sales could occur, could adversely affect the prevailing market price of the shares of our
common stock. Such sales, or the possibility of such sales, could also make it difficult for us to sell equity securities in the
future at a time and at a price that we deem appropriate.
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Our authorized capital stock consists of 700,000,000 shares of common stock and 100,000,000 shares of preferred
stock, a significant portion of which is unissued. We may need to raise a significant amount of capital to pay down
outstanding indebtedness, including principal, interest and fees due under our revolving credit facility, the senior notes, the
DOE Facility and our other indebtedness and may raise such capital through the issuance of newly issued common stock or
preferred stock. Additionally, outstanding warrants to purchase an aggregate of 2,000,000 shares of common stock are
exercisable through July 10, 2027. Such issuance and sale of equity could be dilutive to the interests of existing
stockholders and increase the number of shares eligible for resale in the public market.
Additionally, as of February 27, 2025, The Heritage Group and certain of their affiliates beneficially owned
approximately 25.5% of the outstanding shares of our common stock (prior to any potential dilution resulting from exercise
of the warrants). The Sponsor Parties have registration rights with respect to the shares of common stock they receive
pursuant to the Conversion. Pursuant to the Registration Rights Agreement, we have filed a shelf registration statement
with respect to the registrable securities under the Registration Rights Agreement. No more than two times in any 12-
month period, the Sponsor Parties may request to sell all or any portion of their registrable securities in an underwritten
offering so long as the total offering price is reasonably expected to exceed $25 million. We also agreed to provide
customary “piggyback” registration rights to the Sponsor Parties. The Registration Rights Agreement also provides that we
will pay certain expenses relating to such registrations and indemnify the stockholders against certain liabilities. The
Sponsor Parties’ shares of common stock is currently eligible for sale into the market without volume limitations. Because
of the substantial size of the Sponsor Parties’ holdings, the sale of a significant portion of these shares, or a perception in
the market that such a sale is likely, could have a significant impact on the market price of such shares.
Risks Related to Tax Matters
Compliance with and changes in tax laws could adversely affect our performance.
The Company is subject to extensive tax liabilities, including federal, state, local and foreign taxes such as income,
excise, sales/use, payroll, franchise, property, gross receipts, withholding and ad valorem taxes. New tax laws and
regulations and changes in existing tax laws and regulations, such as the IRA, are continuously being enacted or proposed
and could result in increased expenditures for tax liabilities in the future. These liabilities are subject to periodic audits by
the respective taxing authorities, which could increase our tax liabilities. Subsequent changes to our tax liabilities as a
result of these audits may also subject us to interest and penalties. There can be no certainty that our federal, state, local or
foreign taxes could be passed on to our customers.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
We maintain a cyber risk management program designed to identify, assess, manage, mitigate, and respond to
cybersecurity threats. An analysis of the impact, likelihood, and management preparedness of cybersecurity threats to our
strategic priorities is integrated into our enterprise risk management program and enterprise risk assessment process. This
is intended to provide cross-functional visibility, as well as executive leadership oversight, to address and mitigate
associated risks. Our internal IT group audits our information security programs, and the results are reported to our
executive management and the Risk Committee of our Board of Directors by the Director of Information Technology. We
also engage third-party firms to identify, assess, and manage cybersecurity risks in alignment with cybersecurity standards.
We further employ systems and processes designed to oversee, identify, and reduce the potential impact of a cybersecurity
incident at a third-party vendor, service provider or customer or otherwise implicating the third-party technology and
systems we use. We also carry cybersecurity insurance to protect against potential losses arising from a cybersecurity
incident.
Our policies and procedures also address the oversight, identification, and mitigation of cybersecurity risks associated
with our use of third-party service providers. Our policy stipulates that each third-party service provider go through a
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mandatory IT Security Governance review and obtain formal approval by our IT Security Governance group before it can
be used.
We have an Incident Response Plan (“IRP”) that defines and documents procedures for assessing, identifying, and
managing a cybersecurity incident. The IRP sets out a coordinated approach to investigating, containing, documenting and
mitigating incidents, including reporting findings and keeping senior management and other key stakeholders informed and
involved as appropriate. In general, our incident response process aligns with the NIST framework and focuses on four
phases: preparation; detection and analysis; containment, eradication and recovery; and post-incident remediation. The IRP
applies to all personnel (including third-party partners) that perform functions or services require access to secure
Company information, and to all devices and network services that are owned or managed by the Company. We also have
protocols by which certain cybersecurity incidents are escalated within the Company and, where appropriate, reported to
the Board of Directors.
Our Director of Information Technology, who has extensive cybersecurity knowledge and skills gained from over
twenty years of work experience at the Company and elsewhere, heads the team responsible for implementing, monitoring
and maintaining cybersecurity and data protection practices across our business and reports directly to the Executive Vice
President — Chief Financial Officer. The Director of Information Technology receives reports on cybersecurity threats
from a number of experienced information security officers responsible for various parts of the business on an ongoing
basis and in conjunction with management, regularly reviews risk management measures implements by the Company to
identify and mitigate data protection and cybersecurity risks. Our Director of Information Technology works with Legal to
oversee compliance with legal, regulatory, and contractual security requirements.
Our Board has delegated the primary responsibility to oversee cybersecurity matters to the Risk Committee. Aside
from more immediate reporting of certain incidents to our Board of Directors as described above, our Director of
Information Technology provides our Risk Committee an update on cybersecurity at least every other quarter and more
often as necessary. This update includes metrics on the effectiveness of technical and human security controls,
cybersecurity training program compliance, internal and third-party cybersecurity incidents, and cybersecurity risks.
Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially
affected us, including our business strategy, results of operations or financial condition. If our systems, or our customers' or
suppliers' systems, for protecting against cybersecurity incidents prove to be insufficient, a cybersecurity incident could
have a material adverse effect on our business, operations, or consolidated financial condition. As part of our overall risk
mitigation strategy, the Company maintains cyber insurance coverage; however, such insurance may not be sufficient in
type or amount to cover us against claims related to cybersecurity incidents or other related breaches. Please refer to Part I,
Item 1A “Risk Factors — Risks Related to Our Business” for additional information about our cybersecurity risks.
Item 3. Legal Proceedings
We are not a party to, and our property is not the subject of, any pending legal proceedings other than ordinary routine
litigation incidental to our business. Our operations are subject to a variety of risks and disputes normally incident to our
business. As a result, we may, at any given time, be a defendant in various legal proceedings and litigation arising in the
ordinary course of business. Please read Items 1 and 2 “Business and Properties — Environmental and Occupational
Health and Safety Matters” for a description of our current regulatory matters related to the environment, health and safety.
Additionally, the information provided under Note 6 — “Commitments and Contingencies” in Part II, Item 8 “Financial
Statements and Supplementary Data — Notes to Consolidated Financial Statements” is incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock is quoted and traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CLMT.”
As of February 28, 2025, there were approximately 23 registered holders of record of our common stock. A substantially
greater number of holders of our common stock are “street name” or beneficial holders, whose shares of record are held by
banks, brokers and other financial institutions. As of February 28, 2025, there were 86,207,118 shares of our common
stock outstanding.
We intend to consider the declaration of a dividend on a quarterly basis, although there is no assurance as to future
dividends since they are dependent upon future earnings, capital requirements, our financial condition and other factors.
Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Item 6. Reserved
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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, 2024, 2023 and 2022. 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, see 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 Great Falls 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 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
Corporate Conversion
On July 10, 2024, Calumet, Inc., a Delaware corporation (the “Company” or “Calumet”), completed the previously
announced conversion transaction contemplated by the Conversion Agreement, dated as of February 9, 2024 (as amended,
the “Conversion Agreement”), by and among Calumet Specialty Products Partners, L.P. (the “Partnership”), the General
Partner, Calumet Merger Sub I LLC (“Merger Sub I”), Calumet Merger Sub II LLC (“Merger Sub II”) and the other parties
thereto, including The Heritage Group (the “Sponsor Parties”). Pursuant to the Conversion Agreement, (a) Merger Sub II
merged with and into the Partnership, with the Partnership continuing as the surviving entity and a wholly owned
subsidiary of the Company, and all of the common units were exchanged into the right to receive an equal number of shares
of common stock, par value $0.01 per share, of the Company (“Common Stock”) and (b) Merger Sub I merged with and
into the General Partner, with the General Partner continuing as the surviving entity and a wholly owned subsidiary of the
Company, and all outstanding equity interests of the General Partner (1,640,583 general partner units) were exchanged into
the right to receive an aggregate of 5,500,000 shares of Common Stock and 2,000,000 warrants to purchase common stock
at an exercise price of $20.00 per share (subject to adjustment) on or prior to July 10, 2027.
9.75% Senior Notes due 2028
On January 16, 2025, the Partnership and Calumet Finance Corp. (collectively, the “Issuers”) issued $100.0 million
aggregate principal amount of a new series of the Issuers’ 9.75% Senior Notes due 2028 (the “2028 Notes”) in a private
placement conducted pursuant to Rule 144A and Regulation S under the Securities Act. The 2028 Notes were issued at
98% of par for net proceeds of approximately $96.2 million, after deducting the initial purchasers’ discount and estimated
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offering expenses. The Company intends to use the net proceeds from the offering of the Notes to redeem a portion of the
Issuers’ outstanding 2026 Notes on or before April 15, 2025.
U.S. Department of Energy Facility
On January 10, 2025, MRL and the DOE, as guarantor and loan servicer, executed a Loan Guarantee Agreement
(“LGA”) for a $1.44 billion guaranteed loan facility to fund the construction and expansion of the renewable fuels facility
owned by MRL. The loan guarantee is structured in two tranches, with the first tranche of approximately $782 million
disbursed on February 18, 2025 (the “Funding Date”) to fund eligible expenses previously incurred by MRL. MRL has the
ability to draw additional tranches of up to $658 million through a delayed draw construction facility from the beginning of
construction in 2025 through the anticipated completion of the MaxSAFTM project in 2028, which includes a series of
discrete, modular projects to enhance MRL’s SAF capacity. Under the MaxSAFTM project, we are planning to increase
SAF capacity to approximately 150 million gallons per year within two years and approximately 300 million gallons at the
completion of the project. The second tranche under the LGA is subject to the achievement of certain milestone conditions.
As a result, we can provide no assurance on the funding of the second tranche under the LGA.
The LGA is secured by substantially all of MRL’s assets, and a pledge from MRHL over its right, title and interests to
100% of the equity interests of MRL. The LGA contains events of default that are customary in nature for financings of
this type, including, among other things, (a) the non-payment of principal or interest, (b) material violations of covenants,
(c) material breaches of representations and warrants, (d) certain bankruptcy events and (e) certain change of control
events.
The LGA is also subject to amortization events that are customary in nature for financings of this type, including (a)
failure to maintain financial ratios, (b) disposition of certain assets and (c) failure to meet certain project milestones. The
occurrence of an amortization event or an event of default could result in accelerated amortization of the LGA, and the
occurrence of an event of default could, in certain instances, result in the liquidation of the collateral securing the LGA.
In connection with the funding of the first tranche under the DOE Facility, MRL terminated (i) the Master Lease
Agreement (including the equipment schedules thereto) and the Interim Funding Agreement, each dated as of December
31, 2021, as amended from time to time (collectively, the “MRL Asset Financing Arrangements”), between MRL and
Stonebriar Commercial Finance LLC (“Stonebriar”), (ii) the Credit Agreement, dated as of April 19, 2023, as amended
from time to time (the “MRL Term Loan Credit Agreement”), among MRL, MRHL, the lenders from time to time party
thereto (including an affiliate of I Squared Capital) and Delaware Trust Company, as administrative agent, (iii) the Credit
Agreement, dated as of November 2, 2022, as amended from time to time (the “MRL Revolving Credit Agreement”),
among MRL, MRHL and Wells Fargo Bank, National Association, as administrative agent and lender and (iv) the ISDA
2002 Master Agreement, including the Credit Support Annex to the Schedule thereto and the Renewable Fuel & Feedstock
Repurchase Master Confirmation, dated October 3, 2023, as amended from time to time (the “MRL Supply and Offtake
Agreement”), between MRL and Wells Fargo Commodities, LLC.
On the Funding Date, the Company used a portion of the proceeds from the first tranche of the DOE Facility to:
●
repurchase all of the equipment associated with the MRL Asset Financing Arrangements for approximately
$392.3 million (including exit fees of $23.0 million);
●
repay in full the outstanding loans of approximately $83.8 million under the MRL Term Loan Credit Agreement
(including a make-whole premium of approximately $9.4 million and an early termination premium of
approximately $0.7 million);
●
repay in full the outstanding loans of approximately $26.7 million under the MRL Revolving Credit Agreement;
and
●
repay in full the outstanding obligations of approximately $32.5 million under the MRL Supply and Offtake
Agreement.
Refer to Note 8 — “Long-Term Debt” under Part II, Item 8 “Financial Statements — Notes to Consolidated Financial
Statements” for further information regarding the MRL Asset Financing Arrangements, the MRL Term Loan Credit
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Agreement and MRL Revolving Credit Agreement. Refer to Note 7 — “Inventory Financing Agreements” under Part II,
Item 8 “Financial Statements — Notes to Consolidated Financial Statements” for further information regarding the MRL
Supply and Offtake Agreement.
In addition, the Company received $40.0 million of cash from Stonebriar on the Funding Date in satisfaction of the
remaining purchase price for the Montana Refinery Asset Financing Arrangement. Refer to Note 8 — “Long-Term Debt”
under Part II, Item 8 “Financial Statements — Notes to Consolidated Financial Statements” for further information
regarding the Montana Refinery Asset Financing Arrangement.
2024 Update
Outlook and Trends
During the fourth quarter of 2024, our business continued to benefit from strong production volumes. In the fourth
quarter, we achieved new operational milestones, including another exceptional production quarter following the volume
records set in the third quarter of 2024 in our specialties business. At Montana Renewables, we successfully completed a
planned turnaround in December and achieved our year end operational cost target of $0.70/gallon. Additionally, we
continue to benefit from enhanced operational performance following 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, which has proved resilient despite the weakened commodity margin environment
hampering results for our fuel based products. As anticipated, fourth quarter results reflected typical seasonal impacts to
the fuel and asphalt business. 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. As expected,
margins continue to normalize relative to the record highs experienced in the second half of 2022 and early 2023. We
expect the current margin environment for both specialty products and fuel based products to continue into the first quarter
of 2025. Further, we believe low unemployment and stabilizing raw material and packaging costs point to a continuation of
healthy demand for the majority of our products. While the risk of recession and inflation continue to be monitored, our
plants and the industry are expected to operate at high rates to meet market demand.
In our Montana/Renewables segment, we continue to see strong demand for our renewable fuel products. We maintain
our outlook of strong demand for renewable fuel products, including those we produce at our Montana Renewables facility.
We believe demand for renewable fuel products will only continue to grow as a result of the increased focus on domestic
fuel production, the rapid expansion of corporate decarbonization targets and the benefits thereto for the aviation industry,
strategic alignment with the agricultural industry as renewable fuels represent a key end market, broad sustainability
initiatives, and governmental mandates and incentives that have been passed or announced by national, state, and
provincial jurisdictions across the globe. In light of the global decarbonization initiatives, forecasts of future renewable fuel
availability still fall short of the necessary emissions reductions that would be required to reach established decarbonization
and/or net-zero goals, as adequate supply does not exist yet. For example, in 2024, our Montana Renewables facility was
one of the only facilities in North America capable of SAF production at scale. 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. In November 2024, we conducted a planned turnaround to change catalyst at our Montana Renewables
facility, which was completed successfully in December. The timing of the turnaround was planned to coincide with a
period of margin uncertainty as the blender tax credit transitions to the production tax credit.
Our Montana specialty asphalt facility continues to be impacted by WCS inflationary pressure, but 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.
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
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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, please 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 $222.0 million in 2024, versus net income of $48.1 million in 2023. We reported Adjusted
EBITDA (as defined in Item 7 “Management’s Discussion and Analysis — Non-GAAP Financial Measures”) of $194.8
million in 2024, versus $260.5 million in 2023. We used cash from operating activities of $46.4 million in 2024, versus
using cash from operating activities of $14.9 million in 2023.
Please read Item 7 “Management’s Discussion and Analysis — Non-GAAP Financial Measures” for a reconciliation
of EBITDA and Adjusted EBITDA 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 $193.6 million in 2024 compared to $251.2 million
in the prior year. We remained focused on leveraging our integrated assets and producing greater volumes of specialty
products compared to fuels. However, compared to the prior year, Specialty Products and Solutions segment Adjusted
EBITDA was unfavorably impacted by the lower commodity margin environment in our fuels business that has impacted
the broader industry. Our current period results were favorably impacted by throughput volumes as a result of improved
operational performance, reflective of our investments to improve the reliability of our assets.
Montana/Renewables segment Adjusted EBITDA was $16.7 million in 2024 compared to $30.2 million in 2023.
Compared to the prior year, Montana/Renewables segment Adjusted EBITDA was unfavorably impacted by a decrease to
margins in both our legacy specialty asphalt business and in our renewable fuels business. In our legacy specialty asphalt
business, margins were unfavorably impacted due to a tighter WCS spread exacerbated by a rapid run-up in WCS prices
early in the year, a seasonally weak asphalt and gas market during the first half of the year, and a late start to the retail
paving season. In our renewable fuels business, margins were unfavorably impacted from higher material costs in the
beginning of the year, primarily as it related to processing higher priced pre-treated feedstocks carried into 2024 as a
consequence of the summer 2023 slowdown related to a steam system issue, and feedstock price lag in the second half of
the year when the industry saw feedstock prices abruptly drop approximately $0.40 per gallon mid-year. Current year
results were favorably impacted by strong operations at our Montana Renewables facility, which achieved multiple
operational milestones during the year, including achievement of our year end operational cost target of $0.70/gallon.
Performance Brands segment Adjusted EBITDA was $57.4 million in 2024 compared to $47.9 million in 2023.
Compared to the prior year, Performance Brands segment Adjusted EBITDA was favorably impacted from the strong
volume growth across high performance products, in particular our TruFuel product line and our integrated industrial
business. This segment continues to benefit from strong unit margins, reflective of stabilized input costs in our branded and
consumer markets and a focus on growing our presence in industrial markets.
Corporate segment Adjusted EBITDA was negative $72.9 million in 2024 versus negative $68.8 million in 2023
primarily due to higher labor and benefits related expenses.
Liquidity Update
As of December 31, 2024, we had total liquidity of $178.2 million comprised of $38.1 million of unrestricted cash and
$140.1 million of availability under our revolving credit facilities. As of December 31, 2024, our revolving credit
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55
facilities had a $472.1 million borrowing base, $286.6 million in outstanding borrowings and $45.4 million of outstanding
standby letters of credit. We believe we will continue to have sufficient liquidity from cash on hand, projected cash flow
from operations, borrowing capacity and other means by which to meet our financial commitments, debt service
obligations, contingencies, and anticipated capital expenditures for at least the next 12 months. Please read Item 7
“Management’s Discussion and Analysis — Liquidity and Capital Resources” and Part I, Item 1A. “Risk Factors” for
additional information.
Renewable Fuel Standard Update
Along with the broader refining industry, we remain subject to compliance costs under the RFS unless or until we
receive a small refinery exemption from the EPA, which we have historically received. Administered by the EPA, the RFS
provides annual requirements for the total volume of renewable transportation fuels that are mandated to be blended into
finished transportation fuels. If a refiner does not meet its required annual Renewable Volume Obligation, the refiner can
purchase blending credits in the open market, referred to as RINs. For more information, see Part I, Item 1A, “Risk Factors
— The availability and cost of renewable identification numbers and results of litigation related to our SRE petitions could
have a material adverse effect on our results of operations and financial condition and our ability to make payments on our
debt obligations.”
For the year ended December 31, 2024, we recorded a gain of $31.9 million for RINs, as compared to a gain of $231.2
million for RINs for the year ended December 31, 2023. Our gross RINs Obligation, which includes RINs that are required
to be secured through either our own blending or through the purchase of RINs in the open market, is spread across four
compliance categories (D3, D4, D5 and D6). The gross RINs obligations may be satisfied by our own renewables blending,
RIN purchases, or receipt of small refinery exemptions.
Expenses related to RFS compliance have the potential to remain a significant expense for our two segments
containing fuels products. If legal or regulatory changes occur that have the effect of increasing our RINs Obligation or
eliminating or narrowing the availability of the small refinery exemption under the RFS program, we could be required to
purchase additional RINs in the open market, which may materially increase our costs related to RFS compliance and
could have a material adverse effect on our results of operations and liquidity.
See Note 2 — “Summary of Significant Accounting Policies” under Part II, Item 8 “Financial Statements — Notes to
Consolidated Financial Statements” for further information on the Company’s RINs obligation.
Unrestricted Subsidiaries
See Note 19 — “Unrestricted Subsidiaries” under Part II, Item 8 “Financial Statements — Notes to Consolidated
Financial Statements” for further information regarding certain financial information of our unrestricted subsidiaries.
Key Performance Measures
Our sales and results of operations are principally affected by demand for specialty products, fuel and renewable fuel
product demand, global fuel crack spreads, the price of natural gas used as fuel in our operations, our ability to operate our
production facilities at high utilization, and our results from derivative instrument activities.
Our primary raw materials are crude oil, renewable feedstocks and other specialty feedstocks, and our primary outputs
are specialty consumer facing and industrial products, specialty branded products, and fuel and renewable fuel products.
The prices of crude oil, specialty products and fuel and renewable fuel products are subject to fluctuations in response to
changes in supply, demand, market uncertainties and a variety of factors beyond our control. We monitor these risks and
from time-to-time enter into derivative instruments designed to help mitigate the impact of commodity price fluctuations
on our business. The primary purpose of our commodity risk management activities is to economically hedge our cash flow
exposure to commodity price risk. We may also hedge when market conditions exist that we believe to be out of the
ordinary and particularly supportive of our financial goals. We enter into derivative contracts for future periods in
quantities that do not exceed our projected purchases of crude oil and natural gas and sales of fuel products. Please read
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56
Note 9 — “Derivatives” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated
Financial Statements.”
Our management uses several financial and operational measurements to analyze our performance. These
measurements include the following:
●
sales volumes;
●
segment gross profit;
●
segment Adjusted gross profit;
●
segment Adjusted EBITDA; and
●
selling, general and administrative expenses.
Sales volumes. We view the volumes of Specialty Products and Solutions products, Montana/Renewables products and
Performance Brands products sold as an important measure of our ability to effectively utilize our operating assets. Our
ability to meet the demands of our customers is driven by the volumes of feedstocks that we run at our facilities. Higher
volumes typically improve profitability both through the spreading of fixed costs over greater volumes and the additional
gross profit achieved on the incremental volumes.
Segment gross profit. Specialty Products and Solutions, Montana/Renewables and Performance Brands products’ gross
profit are important measures of profitability of our segments. We define gross profit as sales less the cost of crude oil and
other feedstocks, LCM/LIFO adjustments, and other production-related expenses, the most significant portion of which
includes labor, plant fuel, utilities, contract services, maintenance, transportation, RINs, depreciation and amortization and
processing materials. We use gross profit as an indicator of our ability to manage margins in our business over the long-
term. The increase or decrease in selling prices typically lags behind the rising or falling costs, respectively, of feedstocks
throughout our business. Other than plant fuel, RINs mark-to-market adjustments, and LCM/LIFO adjustments, production
related expenses generally remain stable across broad ranges but can fluctuate depending on maintenance activities
performed during a specific period.
Segment Adjusted gross profit. Specialty Products and Solutions, Montana/Renewables and Performance Brands
products segment Adjusted gross profit measures are useful as they exclude transactions not related to our core cash
operating activities and provide metrics to analyze the profitability of the core cash operations of our segments. We define
segment Adjusted gross profit as segment gross profit excluding the impact of (a) LCM inventory adjustments; (b) the
impact of liquidation of inventory layers calculated using the LIFO method; (c) RINs mark-to-market adjustments; and
(d) depreciation and amortization.
Segment Adjusted EBITDA. We believe that Specialty Products and Solutions, Montana/Renewables and Performance
Brands segment Adjusted EBITDA measures are useful as they exclude transactions not related to our core cash operating
activities and provide metrics to analyze our ability to pay interest to our noteholders. Adjusted EBITDA allows us to
meaningfully analyze the trends and performance of our core cash operations as well as to make decisions regarding the
allocation of resources to segments. Corporate Adjusted EBITDA primarily reflects general and administrative costs.
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57
Results of Operations
Production Volume. The following table sets forth information about our continuing operations after giving effect to
the elimination of all intercompany activity. Facility production volume differs from sales volume due to changes in
inventories and the sale of purchased blendstocks such as ethanol and specialty blendstocks, as well as the resale of crude
oil.
Year Ended December 31,
2024
2023
2022
(In bpd)
Total sales volume (1)
88,007
79,805
82,946
Facility production:
Specialty Products and Solutions:
Lubricating oils
12,174
10,358
10,951
Solvents
7,570
7,208
7,100
Waxes
1,540
1,326
1,452
Fuels, asphalt and other by-products
36,396
37,353
40,221
Total Specialty Products and Solutions
57,680
56,245
59,724
Montana/Renewables:
Gasoline
3,556
3,898
3,409
Diesel
2,830
2,941
6,449
Jet fuel
472
449
820
Asphalt, heavy fuel oils and other
3,983
4,483
6,942
Renewable fuels
9,848
6,314
—
Total Montana/Renewables
20,689
18,085
17,620
Performance Brands
1,739
1,474
1,434
Total facility production
80,108
75,804
78,778
(1)
Total sales volume includes sales from the production at our facilities and certain third-party facilities pursuant to
supply and/or processing agreements, sales of inventories and the resale of crude oil to third-party customers. Total
sales volume includes the sale of purchased blendstocks.
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58
The following table reflects our consolidated results of operations and includes the non-GAAP financial measures
EBITDA and Adjusted EBITDA. For a reconciliation of EBITDA and Adjusted EBITDA to Net income (loss), our most
directly comparable financial performance measure calculated and presented in accordance with GAAP, please read “Non-
GAAP Financial Measures.”
Year Ended December 31,
2024
2023
2022
(In millions)
Sales
$ 4,189.4
$ 4,181.0
$ 4,686.3
Cost of sales
3,958.6
3,729.3
4,334.6
Gross profit
230.8
451.7
351.7
Operating costs and expenses:
Selling
55.7
54.9
53.9
General and administrative
145.5
133.0
143.4
Taxes other than income taxes
20.7
21.5
13.7
Loss on impairment and disposal of assets
2.0
3.5
0.7
Other operating (income) expense
(1.2)
(28.4)
8.1
Operating income
8.1
267.2
131.9
Other income (expense):
Interest expense
(236.7)
(221.7)
(175.9)
Debt extinguishment costs
(0.4)
(5.9)
(41.4)
Gain (loss) on derivative instruments
9.3
9.9
(81.7)
Other income (expense)
(1.5)
0.2
(2.8)
Total other expense
(229.3)
(217.5)
(301.8)
Net income (loss) before income taxes
(221.2)
49.7
(169.9)
Income tax expense
0.8
1.6
3.4
Net income (loss)
$
(222.0)
$
48.1
$
(173.3)
EBITDA
$
164.5
$
418.3
$
104.3
Adjusted EBITDA
$
194.8
$
260.5
$
390.0
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59
Non-GAAP Financial Measures
We include in this Annual Report the non-GAAP financial measures EBITDA and Adjusted EBITDA. We provide
reconciliations of EBITDA and Adjusted EBITDA to Net income (loss), our most directly comparable financial
performance measure calculated and presented in accordance with GAAP.
EBITDA and Adjusted EBITDA are used as supplemental financial measures by our management and by external
users of our financial statements, such as investors, commercial banks, research analysts and others, to assess:
●
the financial performance of our assets without regard to financing methods, capital structure or historical cost
basis;
●
the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
●
our operating performance and return on capital as compared to those of other companies in our industry, without
regard to financing or capital structure; and
●
the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative
investment opportunities.
We believe that these non-GAAP measures are useful to analysts and investors as they exclude transactions not related
to our core cash operating activities and provide metrics to analyze our ability to pay interest to our noteholders. However,
the indentures governing our senior notes contain covenants that, among other things, restrict our ability to pay
distributions. We believe that excluding these transactions allows investors to meaningfully analyze trends and
performance of our core cash operations.
We define EBITDA for any period as net income (loss) plus interest expense (including amortization of debt issuance
costs), income taxes and depreciation and amortization. Historically, we considered net income (loss) to be the most
directly comparable GAAP measure to EBITDA. We believe net income (loss) is the most directly comparable GAAP
measure to EBITDA.
We define Adjusted EBITDA for any period as EBITDA adjusted for (a) impairment; (b) unrealized gains and losses
from mark-to-market accounting for hedging activities; (c) realized gains and losses under derivative instruments excluded
from the determination of net income (loss); (d) non-cash equity-based compensation expense and other non-cash items
(excluding items such as accruals of cash expenses in a future period or amortization of a prepaid cash expense) that were
deducted in computing net income (loss); (e) debt refinancing fees, extinguishment costs, premiums and penalties; (f) any
net gain or loss realized in connection with an asset sale that was deducted in computing net income (loss); (g) amortization
of turnaround costs; (h) LCM inventory adjustments; (i) the impact of liquidation of inventory layers calculated using the
LIFO method; (j) RINs mark-to-market adjustments; and (k) all extraordinary, unusual or non-recurring items of gain or
loss, or revenue or expense.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by sales.
The definition of Adjusted EBITDA presented in this Annual Report is similar to the calculation of “Consolidated
Cash Flow” contained in the indentures governing our senior notes. We are required to report Consolidated Cash Flow to
the holders of our senior notes and Adjusted EBITDA to the lenders under our revolving credit facility, and these measures
are used by them to determine our compliance with certain covenants governing those debt instruments. Please read
“Liquidity and Capital Resources — Debt and Credit Facilities” for additional details regarding the covenants governing
our debt instruments.
EBITDA and Adjusted EBITDA should not be considered alternatives to Net income (loss) or Operating income (loss)
or any other measure of financial performance presented in accordance with GAAP. In evaluating our performance as
measured by EBITDA and Adjusted EBITDA, management recognizes and considers the limitations of these
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60
measurements. EBITDA and Adjusted EBITDA do not reflect our liabilities for the payment of income taxes, interest
expense or other obligations such as capital expenditures. Accordingly, EBITDA and, Adjusted EBITDA are only two of
several measurements that management utilizes. Moreover, our EBITDA and Adjusted EBITDA may not be comparable to
similarly titled measures of another company because all companies may not calculate EBITDA and Adjusted EBITDA in
the same manner.
The following tables present a reconciliation of Net income (loss), our most directly comparable GAAP financial
performance measure to EBITDA and Adjusted EBITDA, for each of the periods indicated.
Year Ended December 31,
2024
2023
2022
(In millions)
Reconciliation of Net income (loss) to EBITDA and Adjusted EBITDA
Net income (loss)
$
(222.0)
$
48.1
$
(173.3)
Add:
Interest expense
236.7
221.7
175.9
Depreciation and amortization
149.0
146.9
98.3
Income tax expense
0.8
1.6
3.4
EBITDA
$
164.5
$
418.3
$
104.3
Add:
LCM / LIFO loss
$
12.3
$
35.6
$
6.6
Unrealized (gain) loss on derivative instruments
(47.1)
(33.0)
$
45.9
Debt extinguishment costs
0.4
5.9
41.4
Amortization of turnaround costs
38.0
36.1
23.1
Loss on impairment and disposal of assets
2.0
3.5
0.7
RINs mark-to-market (gain) loss
(66.4)
(290.2)
115.7
Equity-based compensation and other items
19.7
20.2
34.4
Other non-recurring expenses (1)
75.5
60.9
15.6
Noncontrolling interest adjustments
(4.1)
3.2
2.3
Adjusted EBITDA
$
194.8
$
260.5
$
390.0
(1)
For the year ended December 31, 2024, other non-recurring expenses included a $51.3 million realized loss on
derivatives related to our inventory financing arrangements. For the year ended December 31, 2023, other non-
recurring expenses included a $50.6 million charge to cost of sales for losses under firm purchase commitments. For
the year ended December 31, 2022, other non-recurring expenses included a $13.0 million charge to cost of sales for
losses under firm purchase commitments.
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61
Year Ended December 31, 2024, Compared to Year Ended December 31, 2023
Sales. Sales increased $8.4 million, or 0.2%, to $4,189.4 million in 2024 from $4,181.0 million in 2023. Sales for each
of our principal product categories in these periods were as follows:
Year Ended December 31,
2024
2023
% Change
(In millions, except barrel and per barrel data)
Sales by segment:
Specialty Products and Solutions:
Lubricating oils
$
788.6
$
763.8
3.2 %
Solvents
407.3
398.5
2.2 %
Waxes
156.3
163.9
(4.6)%
Fuels, asphalt and other by-products (1)
1,437.1
1,550.7
(7.3)%
Total Specialty Products and Solutions
$
2,789.3
$
2,876.9
(3.0)%
Total Specialty Products and Solutions sales volume (in barrels)
22,868,000
21,468,000
6.5 %
Average Specialty Products and Solutions sales price per barrel
$
121.97
$
134.01
(9.0)%
Montana/Renewables:
Gasoline
$
140.8
$
167.2
(15.8)%
Diesel
114.6
144.8
(20.9)%
Jet Fuel
18.2
20.5
(11.2)%
Asphalt, heavy fuel oils and other (2)
159.6
148.1
7.8 %
Renewable fuels
631.7
513.2
23.1 %
Total Montana/Renewables
$
1,064.9
$
993.8
7.2 %
Total Montana/Renewables sales volume (in barrels)
8,717,000
7,149,000
21.9 %
Average Montana/Renewables sales price per barrel
$
122.16
$
139.01
(12.1)%
Performance Brands:
Total Performance Brands (3)
$
335.2
$
310.3
8.0 %
Total Performance Brands sales volume (in barrels)
626,000
512,000
22.3 %
Average Performance Brands sales price per barrel
$
535.46
$
606.05
(11.6)%
Total sales
$
4,189.4
$
4,181.0
0.2 %
Total Specialty Products and Solutions, Montana/Renewables, and
Performance Brands sales volume (in barrels)
32,211,000
29,129,000
10.6 %
(1)
Represents (a) by-products, including fuels and asphalt, produced in connection with the production of specialty
products at the Princeton, Cotton Valley, Dickinson and Karns City facilities, (b) polyol ester synthetic lubricants
produced at the Missouri facility, and (c) fuels products produced at the Shreveport facility.
(2)
Represents asphalt, heavy fuel oils and other products produced in connection with the production of fuels at the Great
Falls specialty asphalt facility.
(3)
Represents packaged and synthetic specialty products at our Royal Purple, Bel-Ray and Calumet Packaging facilities.
The components of the $87.6 million decrease in Specialty Products and Solutions segment sales in 2024, as compared
to 2023, were as follows:
Dollar Change
(In millions)
Sales price
$
(275.4)
Volume
187.8
Total Specialty Products and Solutions segment sales decrease
$
(87.6)
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62
Specialty Products and Solutions segment sales decreased period over period due to the lower commodity price
environment in the current year period, primarily impacting our fuels business. This impact was partially offset by an
increase in sales volumes as a result of strong market demand.
The components of the $71.1 million increase in Montana/Renewables segment sales in 2024, as compared to 2023,
were as follows:
Dollar Change
(In millions)
Sales price
$
(146.7)
Volume
217.8
Total Montana/Renewables segment sales increase
$
71.1
Montana/Renewables segment sales increased primarily due to stabilized production volumes at our Montana
Renewables facility during the current year period in comparison to lower volumes in the prior year during the start-up of
the facility. This impact was partially offset by the weaker price environment in both our Montana Renewables and
specialty asphalt businesses during the current year in comparison to the prior year period.
The components of the $24.9 million increase in Performance Brands segment sales in 2024, as compared to 2023,
were as follows:
Dollar Change
(In millions)
Sales price
$
(44.0)
Volume
68.9
Total Performance Brands segment sales increase
$
24.9
Performance Brands segment sales increased primarily due to increases in sales volumes as a result of strong market
demand and a continued focus on providing differentiated products with high brand recognition in certain industrial
markets.
Gross Profit. Gross profit decreased $220.9 million, or 48.9%, to $230.8 million in 2024 from $451.7 million in 2023.
Gross profit for our business segments were as follows:
Year Ended December 31,
2024
2023
% Change
(Dollars in millions, except per barrel data)
Gross profit by segment:
Specialty Products and Solutions:
Gross profit
$
189.0
$
402.2
(53.0)%
Percentage of sales
6.8 %
14.0 %
(7.2)%
Specialty Products and Solutions gross profit per barrel
$
8.26
$
18.73
(55.9)%
Montana/Renewables:
Gross profit (loss)
$
(53.5)
$
(32.6)
64.1 %
Percentage of sales
(5.0)%
(3.3)%
(1.7)%
Montana/Renewables gross profit (loss) per barrel
$
(6.14)
$
(4.56)
34.6 %
Performance Brands:
Gross profit
$
95.3
$
82.1
16.1 %
Percentage of sales
28.4 %
26.5 %
1.9 %
Performance Brands gross profit per barrel
$
152.24
$
160.35
(5.1)%
Total gross profit
$
230.8
$
451.7
(48.9)%
Percentage of sales
5.5 %
10.8 %
(5.3)%
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63
The components of the $213.2 million decrease in Specialty Products and Solutions segment gross profit in 2024, as
compared to 2023, were as follows:
Dollar Change
(In millions)
Year ended December 31, 2023 reported gross profit
$
402.2
Cost of materials
109.0
Operating costs
22.2
LCM / LIFO inventory adjustments
(2.3)
Volumes
43.5
Sales price
(275.4)
RINs expense
(110.2)
Year ended December 31, 2024 reported gross profit
$
189.0
The decrease in Specialty Products and Solutions segment gross profit for the year ended December 31, 2024, as
compared to the same period in 2023, was primarily due to the impact of RINs prices. While RINs prices decreased in the
current year period in comparison to the prior year period, the mark-to-market impact of RINs prices resulted in a RINs
benefit of $16.1 million in the current year period, as compared to a benefit of $126.3 million in the prior year period. The
unfavorable impact associated with margins was primarily the result of a weakened commodity margin environment for
fuels products. The favorable volumes impact was the result of strong market demand and the benefit of improved
reliability, primarily in the second half of 2024, following increased capital expenditures over the last several years. The
favorable impact for operating costs in the current year period was due to the absence of expenses associated with
turnarounds completed at our Shreveport, Cotton Valley, and Princeton facilities and unplanned outages as a result of the
severe weather experienced in Northwest Louisiana during the prior year comparative period. Refer to Note 2 —
“Summary of Significant Accounting Policies” under Part II, Item 8 “Financial Statements and Supplementary Data —
Notes to Consolidated Financial Statements” for additional information related to our accounting for RINs.
The components of the $20.9 million decrease in Montana/Renewables segment gross profit (loss) in 2024, as
compared to 2023, were as follows:
Dollar Change
(In millions)
Year ended December 31, 2023 reported gross profit (loss)
$
(32.6)
Cost of materials
142.4
LCM / LIFO inventory adjustments
24.2
Volumes
33.8
RINs expense
(64.0)
Operating costs
(10.6)
Sales price
(146.7)
Year ended December 31, 2024 reported gross profit (loss)
$
(53.5)
The decrease in Montana/Renewables segment gross profit (loss) for the year ended December 31, 2024, as compared
to the same period in 2023, was primarily due to the impact of RINs prices. While RINs prices decreased in the current
year period in comparison to the prior year period, the mark-to-market impact of RINs prices resulted in a RINs benefit of
$15.8 million in the current year period, as compared to a benefit of $79.8 million in the prior year period. This was
coupled with the unfavorable impact resulting from a softer commodity margin environment in the current year period in
comparison to the prior year. Operating expenses were unfavorable period over period as a result of operating the feedstock
pre-treatment unit for the duration of the current year. The favorable volumes impact was the result of stabilized production
at our Montana Renewables facility during the current year period. Refer to Note 2 — “Summary of Significant
Accounting Policies” under Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated
Financial Statements” for additional information related to our accounting for RINs.
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The components of the $13.2 million increase in Performance Brands segment gross profit in 2024, as compared to
2023, were as follows:
Dollar Change
(In millions)
Year ended December 31, 2023 reported gross profit
$
82.1
Sales price
(44.0)
Operating costs
(4.2)
LCM / LIFO inventory adjustments
1.4
Volume
23.8
Cost of materials
36.2
Year ended December 31, 2024 reported gross profit
$
95.3
The increase in Performance Brands segment gross profit for the year ended December 31, 2024, as compared to the
same period in 2023, was primarily due to an increase in industrial volumes. This segment continues to benefit from strong
unit margins, reflective of stabilized input costs in our branded and consumer markets.
General and administrative. General and administrative expenses increased $12.5 million, or 9.4%, to $145.5 million
in 2024 from $133.0 million in 2023. The increase was due primarily to a $6.6 million increase in labor and benefits
expenses and a $4.7 million increase in professional services fees. The increase in professional services fees were primarily
related to IT infrastructure support services.
Other operating income. Other operating income decreased $27.2 million, or 95.8%, to $1.2 million in 2024 from
$28.4 million in 2023. Prior year results included a $25.1 million gain associated with RINs for compliance year 2019
related to the San Antonio refinery. This impact was absent in the current year results.
Interest expense. Interest expense increased $15.0 million, or 6.8%, to $236.7 million in 2024 from $221.7 million in
2023. The increase was primarily due to higher borrowings on our revolving credit facility during the current year period in
comparison to the prior year.
Year Ended December 31, 2023, Compared to Year Ended December 31, 2022
Refer to Item 7 “Management’s Discussion and Analysis — Year Ended December 31, 2023, Compared to Year Ended
December 31, 2022” of our 2023 Annual Report for a description of the factors impacting our results of operations for the
year ended December 31, 2023 in comparison to the year ended December 31, 2022.
Liquidity and Capital Resources
Our principal sources of cash have historically included cash flow from operations, proceeds from public equity
offerings, proceeds from notes offerings, bank borrowings and other financial arrangements. Principal uses of cash have
included capital expenditures, acquisitions, and debt service. We may from time to time seek to retire or purchase our
outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately
negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market
conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
In general, we expect that our short-term liquidity needs, including debt service, working capital, replacement and
environmental capital expenditures and capital expenditures related to internal growth projects, will be met primarily
through cash on hand, projected cash flow from operations, borrowing capacity under our revolving credit facility and asset
sales.
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On January 17, 2024, the Company entered into the Fourth Amendment to its revolving credit facility (the “Credit
Agreement”) governing its senior secured revolving credit facility maturing in January 2027, which provides maximum
availability of credit under the revolving credit facility of $650.0 million, including a FILO tranche, subject to borrowing
base limitations, and includes a $500.0 million incremental uncommitted expansion feature. Lenders under the revolving
credit facility have a first priority lien on, among other things, the Company’s accounts receivable, inventory and
substantially all of its cash (collectively, the “Credit Agreement Collateral”). Please refer to Note 8 — “Long-Term Debt”
in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for
additional information.
On March 7, 2024, the Company issued and sold $200.0 million in aggregate principal amount of 2029 Secured Notes
in a private placement transaction in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act
of 1933, as amended (the “Securities Act”). The 2029 Secured Notes were issued at par for net proceeds of $199.0 million,
after deducting transaction expenses. The Company used the net proceeds from the private placement of the 2029 Secured
Notes, together with cash on hand, to redeem all of its outstanding 9.25% Senior Secured First Lien Notes due 2024 (the
“2024 Secured Notes”) and $50.0 million aggregate principal amount of its outstanding 11.00% Senior Notes due 2025 (the
“2025 Notes”). Please refer to Note 8 — “Long-Term Debt” in Part II, Item 8 “Financial Statements and Supplementary
Data — Notes to Consolidated Financial Statements” for additional information.
On September 30, 2024, Calumet Montana Refining, LLC (“Calumet Montana”), a subsidiary of the Company, entered
into the Montana Refinery Asset Financing Arrangement with Stonebriar related to a sale and leaseback transaction.
Pursuant to the Montana Refinery Asset Financing Arrangement, Calumet Montana sold to and leased back from
Stonebriar the Refinery Assets, for a total purchase price of up to $150.0 million. Calumet Montana received $110.0
million of the total purchase price on September 30, 2024 and the remaining purchase price of $40.0 million on February
18, 2025 in connection with the funding of the first tranche of approximately $782 million under the DOE Facility. Please
refer to Note 8 — “Long-Term Debt” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to
Consolidated Financial Statements” for additional information.
On January 17, 2024 (the “Effective Date”), the Company and J. Aron entered into a Monetization Master Agreement
(the “Master Agreement”), a related Financing Agreement (the “Financing Agreement”) and a Supply and Offtake
Agreement (together with the Master Agreement and the Financing Agreement, the “Shreveport Supply and Offtake
Agreement”). Pursuant to the Shreveport Supply and Offtake Agreement, J. Aron agreed to, among other things, purchase
from the Company, or extend to the Company, financial accommodations secured by crude oil and finished products
located at the Company’s Shreveport facility on the Effective Date and from time to time, up to maximum volumes
specified for crude oil and categories of finished products, subject to the Company’s repurchase obligations with respect
thereto. The Shreveport Supply and Offtake Agreement replaced the Company’s previous inventory financing agreement
with Macquarie, which terminated on January 17, 2024. Please refer to Note 7 — “Inventory Financing Agreements” in
Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for
additional information.
We expect to fund planned capital expenditures in 2025 of approximately $60 million to $90 million primarily with
cash on hand, cash flows from operations, and by available borrowings under our revolving credit facility. Future internal
growth projects or acquisitions may require expenditures in excess of our then-current cash flow from operations and
borrowing availability under our revolving credit facility and may require us to issue debt or equity securities in public or
private offerings or incur additional borrowings under bank credit facilities to meet those costs. We anticipate that capital
expenditure requirements for the MaxSAFTM project will be funded primarily from cash flows from operations generated
by MRL, an unrestricted subsidiary of the Company, and borrowings under the DOE Facility.
The borrowing base on our revolving credit facilities increased from approximately $421.5 million as of
December 31, 2023, to approximately $472.1 million at December 31, 2024. Our borrowing availability decreased from
approximately $241.9 million at December 31, 2023, to approximately $140.1 million at December 31, 2024. Total
liquidity, consisting of cash and available funds under our revolving credit facilities, decreased from $249.8 million at
December 31, 2023 to $178.2 million at December 31, 2024.
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Cash Flows from Operating, Investing and Financing Activities
We believe that we have sufficient liquid assets, cash flow from operations, borrowing capacity and adequate access to
capital markets to meet our financial commitments, debt service obligations and anticipated capital expenditures for at least
the next 12 months. We continue to seek to lower our operating costs, selling expenses and general and administrative
expenses as a means to further improve our cash flow from operations with the objective of having our cash flow from
operations support all of our capital expenditures and interest payments. However, we are subject to business and
operational risks that could materially adversely affect our cash flows. A material decrease in our cash flow from
operations including a significant, sudden decrease in crude oil prices would likely produce a corollary effect on our
borrowing capacity under our revolving credit facility and potentially our ability to comply with the covenants under our
revolving credit facility. A significant, sudden increase in crude oil prices, if sustained, would likely result in increased
working capital requirements which would be funded by borrowings under our revolving credit facility. In addition, our
cash flow from operations may be impacted by the timing of settlement of our derivative activities. Gains and losses from
derivative instruments that do not qualify as cash flow hedges are recorded in unrealized gain (loss) on derivative
instruments until settlement and will impact operating cash flow in the period settled.
The following table summarizes our primary sources and uses of cash in each of the most recent two years:
Year Ended December 31,
2024
2023
(In millions)
Net cash used in operating activities
$
(46.4)
$
(14.9)
Net cash used in investing activities
(76.7)
(271.8)
Net cash provided by financing activities
154.3
266.2
Net increase (decrease) in cash, cash equivalents and restricted cash
$
31.2
$
(20.5)
Operating Activities. Operating activities used cash of $46.4 million in 2024 compared to using cash of $14.9 million
in 2023. The change was primarily driven by a decrease in unit margins as a result of the weaker margin environment
experienced during the current year period. This impact was partially offset by a decrease in the cash required for working
capital during the current year period.
Investing Activities. Investing activities used cash of $76.7 million in 2024 compared to a use of cash of $271.8 million
in 2023. The change is related to a decrease in cash expenditures for additions to property, plant and equipment in the
current year period in comparison to the prior year. The cash expenditures for additions to property, plant and equipment in
the prior year period were primarily related to our Montana Renewables project.
Financing Activities. Financing activities provided cash of $154.3 million in 2024 compared to providing cash of
$266.2 million in 2023. The change is primarily due to the borrowings we received in the prior year period from the
issuance of the 2028 Notes and the MRL Term Loan Credit Agreement. This was partially offset by the proceeds we
received in the current year from the issuance of the 2029 Notes, borrowings from the Montana terminal asset financing
arrangement and the Montana refinery asset financing arrangement, and the increase in net borrowings on our revolving
credit facility in the current year period compared to the same period in 2023.
Capital Expenditures
Our property, plant and equipment capital expenditure requirements consist of capital improvement expenditures,
replacement capital expenditures, environmental capital expenditures and turnaround capital expenditures. Capital
improvement expenditures include the acquisition of assets to grow our business, facility expansions, or capital initiatives
that reduce operating costs. Replacement capital expenditures replace worn out or obsolete equipment or parts.
Environmental capital expenditures include asset additions to meet or exceed environmental and operating regulations.
Turnaround capital expenditures represent capitalized costs associated with our periodic major maintenance and repairs.
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The following table sets forth our capital improvement expenditures, replacement capital expenditures, environmental
capital expenditures and turnaround capital expenditures in each of the periods shown (including capitalized interest):
Year Ended December 31,
2024
2023
2022
(In millions)
Capital improvement expenditures
$
15.7
$
190.6
$
458.3
Replacement capital expenditures
56.6
69.9
69.2
Environmental capital expenditures
4.4
11.3
8.7
Turnaround capital expenditures
20.6
47.9
62.6
Total
$
97.3
$
319.7
$
598.8
2025 Capital Spending Forecast
We are forecasting total capital expenditures of approximately $60 million to $90 million in 2025. Our forecasted
capital expenditures are primarily related to maintenance and reliability projects and excludes capital expenditures
associated with MaxSAFTM. We anticipate that capital expenditure requirements will be provided primarily through cash
flows from operations, cash on hand, and by available borrowings under our revolving credit facility. We anticipate that
capital expenditure requirements for the MaxSAFTM project will be funded primarily from cash flows from operations
generated by MRL, an unrestricted subsidiary of the Company, and borrowings under the DOE Facility. If future capital
expenditures require amounts in excess of our then-current cash flow from operations and borrowing availability under our
revolving credit facility, we may be required to issue debt or equity securities in public or private offerings or incur
additional borrowings under bank credit facilities to meet those costs.
Debt and Credit Facilities
As of December 31, 2024, our primary debt and credit instruments consisted of:
●
$650.0 million senior secured revolving credit facility maturing in January 2027 (after giving effect to the Fourth
Amendment to our revolving credit facility (the “Credit Facility Amendment”)), subject to borrowing base
limitations, with a maximum letter of credit sub-limit equal to $255.0 million, which amount may be increased to
90% of revolver commitments in effect with the consent of the Agent (as defined in the Credit Agreement)
(“revolving credit facility”);
●
$90.0 million senior secured revolving credit facility, with the option to request additional commitments of up to
$15.0 million, maturing in November 2027 (the “MRL Revolving Credit Agreement”);
●
$354.4 million of 11.00% Senior Notes due 2026 (“2026 Notes”);
●
$325.0 million of 8.125% Senior Notes due 2027 (“2027 Notes”);
●
$325.0 million of 9.75% Senior Notes due 2028 (“2028 Notes”);
●
$200.0 million of 9.25% Senior Secured Notes due 2029 (“2029 Secured Notes”);
●
$73.7 million of borrowings under our MRL Term Loan Credit Agreement;
●
$42.1 million of financing through our Shreveport terminal asset financing arrangement;
●
$368.1 million of financing through our MRL asset financing arrangements;
●
$30.4 million of financing through our Montana terminal asset financing arrangement; and
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●
$108.7 million of financing through our Montana refinery asset financing arrangement.
We were in compliance with all covenants under our debt instruments in place as of December 31, 2024, and believe
we have adequate liquidity to conduct our business.
On January 17, 2024, the Company entered into the Fourth Amendment to its revolving credit facility (the “Credit
Agreement”) governing its senior secured revolving credit facility maturing in January 2027, which provides maximum
availability of credit under the revolving credit facility of $650.0 million, including a FILO tranche, subject to borrowing
base limitations, and includes a $500.0 million incremental uncommitted expansion feature. Lenders under the revolving
credit facility have a first priority lien on, among other things, the Company’s accounts receivable and inventory and
substantially all of its cash (collectively, the “Credit Agreement Collateral”). Please refer to Note 8 — “Long-Term Debt”
in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for
additional information.
On March 7, 2024, the Company issued and sold $200.0 million in aggregate principal amount of 2029 Secured Notes
in a private placement transaction in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act
of 1933, as amended (the “Securities Act”). The 2029 Secured Notes were issued at par for net proceeds of $199.0 million,
after deducting transaction expenses. The Company used the net proceeds from the private placement of the 2029 Secured
Notes, together with cash on hand, to redeem all of its outstanding 9.25% Senior Secured First Lien Notes due 2024 (the
“2024 Secured Notes”) and $50.0 million aggregate principal amount of its outstanding 11.00% Senior Notes due 2025 (the
“2025 Notes”). Please refer to Note 8 — “Long-Term Debt” in Part II, Item 8 “Financial Statements and Supplementary
Data — Notes to Consolidated Financial Statements” for additional information.
On September 30, 2024, Calumet Montana Refining entered into the Montana Refinery Asset Financing Arrangement
with Stonebriar related to a sale and leaseback transaction. Pursuant to the Montana Refinery Asset Financing
Arrangement, Calumet Montana sold to and leased back from Stonebriar the Refinery Assets, for a total purchase price of
up to $150.0 million. Calumet Montana received $110.0 million of the total purchase price on September 30, 2024 and the
remaining purchase price of $40.0 million on February 18, 2025 in connection with the funding of the first tranche of
approximately $782 million under the DOE Facility. Please refer to Note 8 — “Long-Term Debt” in Part II, Item 8
“Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for additional information.
On January 17, 2024 (the “Effective Date”), the Company and J. Aron entered into a Monetization Master Agreement
(the “Master Agreement”), a related Financing Agreement (the “Financing Agreement”) and Supply and Offtake
Agreement (together with the Master Agreement and the Financing Agreement, the “Shreveport Supply and Offtake
Agreement”). Pursuant to the Shreveport Supply and Offtake Agreement, J. Aron agreed to, among other things, purchase
from the Company, or extend to the Company, financial accommodations secured by crude oil and finished products
located at the Company’s Shreveport facility on the Effective Date and from time to time, up to maximum volumes
specified for crude oil and categories of finished products, subject to the Company’s repurchase obligations with respect
thereto. The Shreveport Supply and Offtake Agreement replaced the Company’s previous inventory financing agreement
with Macquarie, which terminated on January 17, 2024. Please refer to Note 7 — “Inventory Financing Agreements” in
Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for
additional information.
Inventory Financing
On January 17, 2024 (the “Effective Date”), the Company and J. Aron entered into a Monetization Master Agreement
(the “Master Agreement”), a related Financing Agreement (the “Financing Agreement”) and Supply and Offtake
Agreement (together with the Master Agreement and the Financing Agreement, the “Shreveport Supply and Offtake
Agreement”). Pursuant to the Shreveport Supply and Offtake Agreement, J. Aron agreed to, among other things, purchase
from the Company, or extend to the Company, financial accommodations secured by crude oil and finished products
located at the Company’s Shreveport facility on the Effective Date and from time to time, up to maximum volumes
specified for crude oil and categories of finished products, subject to the Company’s repurchase obligations with respect
thereto. The Shreveport Supply and Offtake Agreement replaced the Company’s previous inventory financing agreement
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with Macquarie, which terminated on January 17, 2024. Please refer to Note 7 — “Inventory Financing Agreements” in
Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for
additional information.
Short-Term Liquidity
As of December 31, 2024, our principal sources of short-term liquidity were (i) approximately $140.1 million of
availability under our revolving credit facilities, (ii) inventory financing agreements related to our Shreveport facility and
Montana Renewables facility and (iii) $38.1 million of unrestricted cash on hand. Borrowings under our revolving credit
facility can be used for, among other things, working capital, capital expenditures, and other lawful partnership purposes
including acquisitions. For additional information regarding our revolving credit facility, please read Note 8 — “Long-
Term Debt” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial
Statements.”
Long-Term Financing
In addition to our principal sources of short-term liquidity listed above, subject to market conditions, we may meet our
cash requirements through the issuance of long-term notes or additional shares of common stock.
From time to time, we issue long-term debt securities referred to as our senior notes. All of our outstanding senior
notes, other than the 2029 Secured Notes, are unsecured obligations that rank equally with all of our other senior debt
obligations to the extent they are unsecured. As of December 31, 2024, we had $354.4 million in 2026 Notes, $325.0
million in 2027 Notes, $325.0 million in 2028 Notes, and $200.0 million in 2029 Secured Notes outstanding. The 2029
Secured Notes and the related guarantees are secured by a first priority lien (subject to certain exceptions) on all the fixed
assets that secure our obligations under the secured hedge agreements, as governed by the Collateral Trust Agreement,
which governs how secured hedging counterparties and holders of the 2029 Secured Notes share collateral pledged as
security for the payment obligations owed by us to the secured hedging counterparties under their respective master
derivatives contracts and the holders of the 2029 Secured Notes. In addition, as of December 31, 2024, we had $368.1
million of debt outstanding for our MRL asset financing arrangements, $73.7 million of debt outstanding for our MRL
Term Loan Credit Agreement, $42.1 million of other debt outstanding for the Shreveport terminal asset financing
arrangement, $30.4 million of other debt outstanding for the Montana terminal asset financing arrangement, and $108.7
million of other debt outstanding for the Montana refinery asset financing arrangement. Borrowings under the MRL asset
financing arrangements and MRL Term Loan Credit Agreement are obligations of our unrestricted subsidiaries MRL and
MRHL solely, and are non-recourse to the Company and its restricted subsidiaries. For additional information regarding
our MRL asset financing arrangements and MRL Term Loan Credit Agreement, see Note 8 — “Long-Term Debt” under
Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” in this
Annual Report.
To date, our debt balances have not adversely affected our operations or our ability to repay or refinance our
indebtedness. Based on our historical record, we believe that our capital structure will continue to allow us to achieve our
business objectives.
For more information regarding our senior notes, please read Note 8 — “Long-Term Debt” under Part II, Item 8
“Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” in this Annual Report.
Master Derivative Contracts and Collateral Trust Agreement
Under our credit support arrangements, our payment obligations under all of our master derivatives contracts for
commodity hedging generally are secured by a first priority lien on our and our subsidiaries’ real property, plant and
equipment, fixtures, intellectual property, certain financial assets, certain investment property, commercial tort claims,
chattel paper, documents, instruments and proceeds of the foregoing (including proceeds of hedge arrangements). We had
no additional letters of credit or cash margin posted with any hedging counterparty as of December 31, 2024. Our master
derivatives contracts and Collateral Trust Agreement (as defined below) continue to impose a number of covenant
limitations on our operating and financing activities, including limitations on liens on collateral, limitations on dispositions
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of collateral and collateral maintenance and insurance requirements. For financial reporting purposes, we do not offset the
collateral provided to a counterparty against the fair value of our obligation to that counterparty. Any outstanding collateral
is released to us upon settlement of the related derivative instrument liability.
Our various hedging agreements contain language allowing our hedge counterparties to request additional collateral if
a specified credit support threshold is exceeded. However, these credit support thresholds are set at levels that would
require a substantial increase in hedge exposure to require us to post additional collateral. As a result, we do not expect
further increases in fuel products crack spreads or interest rates to significantly impact our liquidity due to requirements to
post additional collateral.
Additionally, we have a collateral trust agreement (the “Collateral Trust Agreement”) which governs how secured
hedging counterparties and holders of the 2029 Secured Notes share collateral pledged as security for the payment
obligations owed by us to the secured hedging counterparties under their respective master derivatives contracts and the
holders of the 2029 Secured Notes. The Collateral Trust Agreement limits to $150.0 million the extent to which forward
purchase contracts for physical commodities are covered by, and secured under, the Collateral Trust Agreement and the
Parity Lien Security Documents (as defined in the Collateral Trust Agreement). There is no such limit on financially settled
derivative instruments used for commodity hedging. Subject to certain conditions set forth in the Collateral Trust
Agreement, we have the ability to add secured hedging counterparties from time to time.
Credit Ratings
In August 2024, S&P reaffirmed a rating of CCC+ on our senior unsecured notes and revised our outlook to negative.
In March 2024, Moody’s reaffirmed a rating of Caa1 on our senior unsecured notes, maintained a Company rating of B3,
and revised our outlook to negative. Our 2029 Secured Notes issued in March 2024 are rated B+ by S&P and B1 by
Moody’s.
Equity Transactions
On January 14, 2025, the Company entered into an Equity Distribution Agreement (the “Equity Distribution
Agreement”) with BMO Capital Markets Corp. (the “Agent”) pursuant to which the Company may sell, from time to time,
up to an aggregate offering price of $65.0 million of its common stock, par value $0.01 per share (the “Common Stock”),
in an “at-the-market” equity offering program (the “ATM Offering”) through the Agent.
Seasonality Impacts on Liquidity
The fuel and fuel related products that we manufacture, including asphalt products, are subject to seasonal demand and
trends. Asphalt demand is generally lower in the first and fourth quarters of the year, as compared to the second and third
quarters, due to the seasonality of the road construction and roofing industries we supply. Demand for gasoline and diesel
is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic
and agricultural activity. In addition, our natural gas costs can be higher during the winter months, as demand for natural
gas as a heating fuel increases during the winter. As a result, our operating results for the first and fourth calendar quarters
may be lower than those for the second and third calendar quarters of each year due to seasonality related to these and other
products that we produce and sell.
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with GAAP requires us to use estimates and
make judgements and assumptions about future events that affect the reported amounts of assets, liabilities, revenue,
expenses, and the related disclosures. Considerable judgement is often involved in making these determinations. Critical
estimates are those that require the most difficult, subjective or complex judgements in the preparation of the financial
statements and the accompanying notes. We evaluate these estimates and judgements on a regular basis. We believe our
assumptions and estimates are reasonable and appropriate. However, the use of different assumptions could result in
significantly different results and actual results could differ from those estimates. The following discussion of accounting
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estimates is intended to supplement the Summary of Significant Accounting Policies presented in Note 2 to our
consolidated financial statements in Part II, Item 8.
We consider an accounting estimate to be critical if:
●
The accounting estimate requires us to make assumptions about matters that are highly uncertain at the time the
accounting estimate is made; and
●
We reasonably could have used different estimates in the current period, or changes in these estimates are
reasonably likely to occur from period to period as new information becomes available, and a change in these
estimates would have a material impact on our financial condition or results from operations.
Valuation of Finite Long-Lived Assets
Property, plant and equipment and intangible assets with finite lives are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the estimated
undiscounted future cash flows related to the asset are less than the carrying value, we recognize a loss equal to the
difference between the carrying value and the estimated fair value, usually determined by the estimated discounted future
cash flows of the asset. When a decision has been made to dispose of property, plant and equipment prior to the end of the
previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over the shortened
estimated useful life.
Estimated undiscounted future cash flows are used for the purpose of testing our finite long-lived assets for
impairment. Fair values calculated for the purpose of measuring impairments on finite long-lived assets are estimated using
the expected present value of future cash flows method and comparative market prices when appropriate. Significant
judgment is involved in estimating undiscounted future cash flows and performing these fair value estimates since the
results are based on forecasted assumptions.
We base our estimated undiscounted future cash flows and fair value estimates on projected financial information
which we believe to be reasonable. However, actual results may differ from these projections.
Valuation of Renewable Identification Numbers (“RINs”) Obligation
The Company’s RINs volume obligation (“RVO” or “RINs Obligation”) is an estimated provision if future purchase of
RINs were to be required in order to satisfy the U.S. Environmental Protection Agency’s (“EPA”) requirement to blend
renewable fuels into certain transportation fuel products pursuant to the Renewable Fuel Standard (“RFS”) of the Clean Air
Act (“CAA”). The Company has historically not been obligated to make these purchases. A RIN is a 38-character number
assigned to each physical gallon of renewable fuel produced in or imported into the United States. The EPA sets annual
volume obligations for the percentage of renewable fuels that must be blended into transportation fuels consumed in the
U.S. Compliance is demonstrated by tendering RINs to the EPA documenting that blending has been accomplished or by
obtaining a Small Refinery Exemption (“SRE”) as provided in the Clean Air Act. Prior to 2018, the Company historically
received the Small Refinery Exemption after qualifying on the merits. The Company’s petitions for the Small Refinery
Exemption for compliance years 2018-2022 were included in blanket denials by EPA across the entire industry. EPA’s
denials of Calumet’s 2018-2020 petitions have been overturned in litigation and are back pending with EPA. The
Company’s cases challenging EPA’s denials for program years 2021 and 2022 remain pending in the Fifth Circuit and D.C.
Circuit. The 2023 petitions were recently denied by the EPA and are the subject of new legal proceedings. The 2024-25
petitions have not yet been decided by EPA. Refer to Note 2 — “Summary of Significant Accounting Policies” in Part II,
Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” for additional
information.
The RVO is a quantity and cannot be settled financially with EPA. The Company accounts for its current period RVO
by multiplying the quantity of RINs shortage (based on actual results) by the period end RINs spot price, which is recorded
as a current liability in the consolidated balance sheets and revalued at the end of each subsequent accounting period,
which produces non-cash mark-to-market adjustments that are reflected in cost of sales in the consolidated statements of
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operations (with the exception of RINs for compliance year 2019 related to the San Antonio refinery, which amount is
reflected in other operating expense in the consolidated statements of operations). RINs generated by blending may be sold
or held to offset future RVO. Any gains or losses from RINs sales are recorded in cost of sales in the consolidated
statements of operations.
Our RINs Obligation is measured at the RINs spot prices obtained from an independent pricing service as of each
balance sheet date. However, certain vintage RINs are very thinly traded, and the period end spot prices might not be an
accurate reflection of the actual amount that we could purchase RINs in the open market in the quantities that would be
required to satisfy our RINs volume obligation. Please read Note 2 — “Summary of Significant Accounting Policies” for
further information on our RINs obligation.
We believe that our small refineries (the “refineries”) qualify for SREs on the merits and we have asked EPA to
approve our petitions. The Company has previously applied for and received SREs through 2018, following a structured
procedure administered by the EPA. According to documentation we have received from the EPA, the analysis prepared by
the Department of Energy (“DOE”) under this procedure showed that the Company’s refineries met the criteria for
disproportionate economic hardship for the 2018, 2019 and 2020 compliance years. The reversal of our previously
approved 2018 SRE in April 2022, the blanket denial in June 2022 by EPA of our 2019 and 2020 petitions, and the blanket
denial in July 2023 by EPA of our 2021 and 2022 petitions were based on EPA’s retroactive across-the-board determination
that there is no such thing as disproportionate economic hardship, despite the affirmative findings from the DOE that the
refineries met the criteria for disproportionate economic hardship.
Management believes that we have viable legal arguments to challenge the denials, including that the denials are
inconsistent with the CAA, the Administrative Procedure Act, EPA’s regulations, the DOE’s analysis and/or the factual
record, and are unlawful retroactive applications of a new standard. In November 2023, the Fifth Circuit ruled in the
Company’s favor on the merits of its challenge as it relates to the Shreveport refinery’s 2019 and 2020 SRE petitions,
vacated EPA’s denial and remanded it to the EPA, and held that EPA’s denial was impermissibly retroactive and also
violated federal law. In January 2024, the Fifth Circuit denied EPA’s request to rehear the case. The court’s mandate issued
in January 2024, and these SRE petitions are before EPA once again for further consideration consistent with the court’s
opinion. The challenge before the D.C. Circuit remains pending. As with any legal action, a challenge to an EPA decision
denying the refineries’ SRE petitions may ultimately be unsuccessful. This scenario would present a number of
uncertainties and complexities caused primarily by the passage of time since we first submitted the SRE petitions,
including for example the potential expiration and/or unavailability or limited availability in the market of vintage 2019,
2020, 2021 and 2022 RINs, the specifics of other potential forthcoming EPA actions, the results of other parties’ potential
litigation avenues and outcomes, and post-litigation uncertainties around the timing and magnitude of any resolution.
Based on current information we believe the most likely outcome is either successful appellate litigation or reaching an
alternative resolution. If we are ultimately successful in obtaining the refineries’ SREs (or a non-enforcement equivalent),
the value of the liability would be zero. If we are ultimately unsuccessful in our appeals, the timing, amount and form our
actual liability may depend upon the resolution obtained, potentially as part of subsequent, additional litigation. For
example, if resolution for the 2019 and 2020 compliance years used the market price of RINs on the day the EPA was
obligated to rule on the refineries’ 2019 SRE petitions, the value of the liability would be approximately $50.7 million.
Recent Accounting Pronouncements
For a summary of recently issued and adopted accounting standards applicable to us, please read Note 2 — “Summary
of Significant Accounting Policies” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to
Consolidated Financial Statements.”
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks from adverse changes in commodity prices, the price of credits needed to comply with
governmental programs, interest rates and foreign currency exchange rates. Information relating to quantitative and
qualitative disclosures about material market risk is set forth below.
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73
Commodity Price Risk
Derivative Instruments
We are exposed to price risks due to fluctuations in the price of crude oil, refined products, natural gas and precious
metals. We use various strategies to reduce our exposure to commodity price risk. We do not attempt to eliminate all of our
risk as the costs of such actions are believed to be too high in relation to the risk posed to our future cash flows, earnings
and liquidity. The strategies we use to reduce our risk utilize both physical forward contracts and financially settled
derivative instruments, such as swaps, collars, options and futures, to attempt to reduce our exposure with respect to:
●
crude oil purchases and sales;
●
refined product sales and purchases;
●
natural gas purchases;
●
precious metals; and
●
fluctuations in the value of crude oil between geographic regions and between the different types of crude oil such
as NYMEX WTI, Light Louisiana Sweet, WCS, WTI Midland, Mixed Sweet Blend, Magellan East Houston and
ICE Brent.
We manage our exposure to commodity markets, credit, volumetric and liquidity risks to manage our costs and
volatility of cash flows as conditions warrant or opportunities become available. These risks may be managed in a variety
of ways that may include the use of derivative instruments. Derivative instruments may be used for the purpose of
mitigating risks associated with an asset, liability and anticipated future transactions and the changes in fair value of our
derivative instruments will affect our earnings and cash flows; however, such changes should be offset by price or rate
changes related to the underlying commodity or financial transaction that is part of the risk management strategy. We do
not speculate with derivative instruments or other contractual arrangements that are not associated with our business
objectives. Speculation is defined as increasing our natural position above the maximum position of our physical assets or
trading in commodities, currencies or other risk bearing assets that are not associated with our business activities and
objectives. Our positions are monitored routinely by a risk management committee and discussed with the board of
directors quarterly to ensure compliance with our stated risk management policy and documented risk management
strategies. All strategies are reviewed on an ongoing basis by our risk management committee, which will add, remove or
revise strategies in anticipation of changes in market conditions and/or in risk profiles. These changes in strategies are to
position us in relation to our risk exposures in an attempt to capture market opportunities as they arise.
Please read Note 9 — “Derivatives” in Part II, Item 8 “Financial Statements and Supplementary Data — Notes to
Consolidated Financial Statements” for a discussion of the accounting treatment for the various types of derivative
instruments, for a further discussion of our hedging policies and for more information relating to our implied crack spreads
of crude oil, diesel, and gasoline derivative instruments.
Our derivative instruments and overall hedging positions are monitored regularly by our risk management committee,
which includes executive officers. The risk management committee reviews market information and our hedging positions
regularly to determine if additional derivatives activity is advised. A summary of derivative positions and a summary of
hedging strategy are presented to our Board of Directors quarterly.
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74
Compliance Price Risk
Renewable Identification Numbers
We are exposed to market risks related to the volatility in the price of credits needed to comply with governmental
programs. The EPA sets annual volume obligations for the percentage of renewable fuels that must be blended into
transportation fuels consumed in the U.S., and as a producer of transportation fuels from petroleum, we are subject to those
obligations. To the extent we are unable to physically blend renewable fuels to satisfy the EPA requirement, we may
purchase RINs in the open market to satisfy the annual obligations. We have not entered into any derivative instruments to
manage this risk.
Holding other variables related to RINs obligations constant, a $1.00 increase in the price of RINs would be expected
to have a negative impact on Net income (loss) of approximately $65.0 million per year.
Interest Rate Risk
Our exposure to interest rate changes on fixed and variable rate debt is limited to the fair value of the debt issued,
which would not have a material impact on our earnings or cash flows. The following table provides information about the
fair value of our fixed and variable rate debt obligations as of December 31, 2024 and December 31, 2023, which we
disclose in Note 8 — “Long-Term Debt” and Note 10 — “Fair Value Measurements” under Part II, Item 8 “Financial
Statements and Supplementary Data — Notes to Consolidated Financial Statements.”
December 31, 2024
December 31, 2023
Fair Value Carrying Value Fair Value Carrying Value
(In millions)
Financial Instrument:
2024 Secured Notes
$
—
$
—
$ 179.7
$
178.8
2025 Notes
$
—
$
—
$ 421.1
$
411.5
2026 Notes
$ 358.0
$
354.0
$
—
$
—
2027 Notes
$ 322.4
$
323.1
$ 320.7
$
322.3
2028 Notes
$ 331.8
$
320.6
$ 325.7
$
319.7
2029 Secured Notes
$ 206.1
$
199.0
$
—
—
Revolving credit facility
$ 286.6
$
283.6
$ 136.7
$
134.4
MRL revolving credit facility
$
—
$
(0.3)
$
13.0
$
12.4
MRL Term Loan Credit Agreement
$
73.7
$
71.4
$
74.4
$
71.6
Shreveport terminal asset financing arrangement
$
42.1
$
41.6
$
50.8
$
50.1
Montana terminal asset financing arrangement
$
30.4
$
30.2
$
—
$
—
Montana refinery asset financing arrangement
$ 108.7
$
108.7
$
—
$
—
MRL asset financing arrangements
$ 368.1
$
365.4
$ 384.6
$
381.6
For our variable rate debt, if any, changes in interest rates generally do not impact the fair value of the debt instrument
but may impact our future earnings and cash flows. We had a $650.0 million revolving credit facility and a $90.0 million
revolving credit facility as of December 31, 2024, with borrowings for each revolving credit facility bearing interest at the
prime rate or SOFR, at our option, plus the applicable margin. In addition, we had $73.7 million of borrowings outstanding
under our MRL Term Loan Credit Agreement as of December 31, 2024, with borrowings bearing interest at SOFR plus
6.0% to 7.3% per annum. We had $286.6 million of outstanding variable rate debt as of December 31, 2024 and $149.7
million of outstanding variable rate debt as of December 31, 2023. Holding other variables constant (such as debt levels), a
100 basis point change in interest rates on our variable rate debt as of December 31, 2024, would be expected to have an
impact on Net income (loss) of approximately $2.9 million per year.
Foreign Currency Risk
We have minimal exposure to foreign currency risk and as such the cost of hedging this risk is viewed to be in excess
of the benefit of further reductions in our exposure to foreign currency exchange rate fluctuations.
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75
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Calumet, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheet of Calumet, Inc. (a Delaware corporation) and subsidiaries
(the “Company”) as of December 31, 2024, the related consolidated statements of operations, comprehensive loss,
stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to
as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its
cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the
United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria
established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (“COSO”), and our report dated February 28, 2025 expressed an unqualified opinion.
Change in accounting principle
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for
segment disclosures in 2024 due to the adoption of ASU 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
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76
Accounting for the C-Corp Conversion
As described further in Note 1 and 2 to the consolidated financial statements, on July 10, 2024, the transactions
contemplated by the Conversion Agreement, among the Company, Calumet Specialty Products Partner, L.P. (the
“Partnership”), Calumet GP, LLC, the general partner of the Partnership (the “General Partner”), Calumet Merger Sub I
LLC, Calumet Merger Sub II LLC and the other parties thereto, including The Heritage Group (collectively, the “Sponsor
Parties”), as amended by the First Amendment to the Conversion Agreement, dated April 17, 2024 (such transactions, the
“C-Corp Conversion”) were completed. With the assistance of a third-party subject matter expert, the Company accounted
for the C-Corp Conversion as a common control transaction. As such, there were no changes in basis to the net assets
recognized at the closing of the transaction.
The principal considerations for our determination that the accounting for the C-Corp Conversion is a critical audit matter
are the complexity of the accounting principles required in determining that the same entity had control before and after the
C-Corp Conversion, which included evaluating if the Partnership met the definition of a variable interest entity (“VIE”),
evaluation of the General Partner and the Sponsor Parties in determination of the primary beneficiary of the VIE, and the
significant judgment required by management in evaluating the Conversion Agreement and structure of the transaction.
This required a high degree of auditor judgment and an increased extent of effort in performing procedures, including
consultation with firm subject matter experts, to evaluate management’s conclusions and the audit evidence obtained.
Our audit procedures related to the accounting for the C-Corp Conversion included the following, among others:
●
We tested the effectiveness of controls over the Company’s accounting for significant non-routine transactions,
including management’s controls over the identification and application of relevant GAAP, and over the
prospective presentation of the Conversion in the consolidated financial statements.
●
We assessed the objectivity, experience, and qualifications of management’s third-party subject matter expert.
●
We read the Conversion Agreement and with the assistance of our subject matter experts, we evaluated
management's analysis of the transaction, including i) the determination of control pre and post C-Corp
Conversion taking into consideration the composition of the board of directors and other legal rights of the
parties, and ii) the significance of the decision-making rights of each party in assessing which party has the power
to direct the activities that most significantly affect who has control.
●
We evaluated the sufficiency of the disclosures in the consolidated financial statements of the Company with
respect to this matter.
/s/ GRANT THORNTON LLP (PCAOB ID 248)
We have served as the Company’s auditor since 2024.
Pittsburgh, Pennsylvania
February 28, 2025
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77
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Calumet, Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Calumet, Inc. (a Delaware corporation) and subsidiaries (the
“Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013
Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated
February 28, 2025 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Pittsburgh, Pennsylvania
February 28, 2025
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78
Report of Independent Registered Public Accounting Firm
To the Board of Directors of Calumet, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Calumet, Inc. (“the Company”) as of December 31,
2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity / partners'
capital (deficit) and cash flows for each of the two years in the period ended December 31, 2023, and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its
operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.
generally accepted accounting principles.
Company’s disclosure of an additional measure of segment profit or loss
In Note 18 to the consolidated financial statements, the Company has elected to disclose “Adjusted Earnings before
interest, taxes, depreciation and amortization” as an additional segment profit or loss measure as permitted pursuant to
ASC 280 and that the U.S. Securities and Exchange Commission (SEC) defines as a non-GAAP measure. Accordingly, we
express no opinion on whether the additional segment profit or loss measure complies with SEC Regulation S-K, Item
10(e) and Regulation G, Item 101.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our
opinion.
/s/ Ernst & Young LLP (PCAOB ID 42)
We served as the Company’s auditor from 2002 to 2024.
Indianapolis, Indiana
February 29, 2024
except for the affects of adopting ASU 2023-07 in Note 18, as to which the date is February 28, 2025
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79
CALUMET, INC.
CONSOLIDATED BALANCE SHEETS
Year Ended December 31,
2024
2023
(In millions, except share/unit data)
ASSETS
Current assets:
Cash and cash equivalents
$
38.1
$
7.9
Accounts receivable, net:
Trade, less allowance for credit losses of $1.1 million and $1.2 million, respectively
241.7
252.4
Other
36.4
33.8
278.1
286.2
Inventories
416.3
439.4
Derivative assets
—
9.6
Prepaid expenses and other current assets
33.5
51.6
Total current assets
766.0
794.7
Property, plant and equipment, net
1,438.8
1,506.3
Goodwill
173.0
173.0
Other intangible assets, net
22.0
28.5
Operating lease right-of-use assets
240.2
114.4
Other noncurrent assets, net
118.2
134.4
Total assets
$
2,758.2
$
2,751.3
LIABILITIES AND STOCKHOLDERS' EQUITY / PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable
$
320.8
$
322.0
Accrued interest payable
45.4
48.7
Accrued salaries, wages and benefits
94.7
87.1
Other taxes payable
11.9
13.5
Obligations under inventory financing agreements
32.0
190.4
Current portion of RINs obligation
245.4
277.3
Current portion of operating lease liabilities
58.8
75.6
Other current liabilities
19.1
42.4
Current portion of long-term debt
35.5
55.7
Total current liabilities
863.6
1,112.7
Pension and postretirement benefit obligations
4.0
4.2
Other long-term liabilities
110.0
10.4
Long-term operating lease liabilities
182.2
39.0
Long-term debt, less current portion
2,064.7
1,829.7
Total liabilities
$
3,224.5
$
2,996.0
Commitments and contingencies
Redeemable noncontrolling interest
$
245.6
$
245.6
Stockholders' equity / partners' capital (deficit):
Common stock: par value $0.01 per share, 700,000,000 shares authorized, and 85,950,493
shares issued and outstanding as of December 31, 2024.
$
0.9
$
—
Additional paid-in capital
825.4
—
Warrants: 2,000,000 warrants issued and outstanding as of December 31, 2024.
7.8
—
Accumulated deficit
(1,539.0)
—
Limited partners' interest (79,967,363 units issued and outstanding at December 31, 2023.)
—
(484.4)
General partners' interest
—
1.3
Accumulated other comprehensive loss
(7.0)
(7.2)
Total stockholders' equity / partners' capital (deficit)
(711.9)
(490.3)
Total liabilities and stockholders' equity / partners' capital (deficit)
$
2,758.2
$
2,751.3
See accompanying notes to consolidated financial statements.
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80
CALUMET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
2024
2023
2022
(In millions, except share/unit and per share/unit data)
Sales
$
4,189.4
$
4,181.0
$
4,686.3
Cost of sales
3,958.6
3,729.3
4,334.6
Gross profit
230.8
451.7
351.7
Operating costs and expenses:
Selling
55.7
54.9
53.9
General and administrative
145.5
133.0
143.4
Taxes other than income taxes
20.7
21.5
13.7
Loss on impairment and disposal of assets
2.0
3.5
0.7
Other operating (income) expense
(1.2)
(28.4)
8.1
Operating income
8.1
267.2
131.9
Other income (expense):
Interest expense
(236.7)
(221.7)
(175.9)
Debt extinguishment costs
(0.4)
(5.9)
(41.4)
Gain (loss) on derivative instruments
9.3
9.9
(81.7)
Other income (expense)
(1.5)
0.2
(2.8)
Total other expense
(229.3)
(217.5)
(301.8)
Net income (loss) before income taxes
(221.2)
49.7
(169.9)
Income tax expense
0.8
1.6
3.4
Net income (loss)
$
(222.0)
$
48.1
$
(173.3)
Allocation of net income (loss) to partners:
Net income (loss) attributable to partners
$
48.1
$
(173.3)
Less:
General partners' interest in net income (loss)
1.0
(3.5)
Net income (loss) available to limited partners
$
47.1
$
(169.8)
Earnings per share / Limited partners' interest net
income (loss) per unit:
Basic and diluted
$
(2.67)
$
0.59
$
(2.14)
Weighted average number of common shares
outstanding / limited partner units outstanding:
Basic and diluted
83,146,680
80,075,530
79,336,283
See accompanying notes to consolidated financial statements.
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81
CALUMET, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Year Ended December 31,
2024
2023
2022
(In millions)
Net income (loss)
$
(222.0)
$
48.1
$
(173.3)
Other comprehensive income:
Defined benefit pension and retiree health benefit plans
0.2
1.1
1.8
Total other comprehensive income
0.2
1.1
1.8
Comprehensive income (loss) attributable to stockholders' equity / partners'
capital (deficit)
$
(221.8)
$
49.2
$
(171.5)
See accompanying notes to consolidated financial statements.
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82
CALUMET, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY / PARTNERS’ CAPITAL (DEFICIT)
Accumulated
Total
Partners' Capital (Deficit)
Stockholders' Equity
Other
Stockholders' Equity
Limited Partner
Limited
General
Common Shares Issued
Additional
Accumulated Comprehensive
Partners' Capital
Units
Partners Partner
Shares
Par Value
Paid-in Capital Warrants
Deficit
Loss
(Deficit)
(In millions)
Balance at
December 31, 2021
78,676,262
$ (378.8) $
3.8
— $
— $
— $
— $
— $
(10.1) $
(385.1)
Other
comprehensive
income
—
—
—
—
—
—
—
—
1.8
1.8
Net loss
—
(169.8)
(3.5)
—
—
—
—
—
—
(173.3)
Settlement of tax
withholdings on
equity-based
incentive
compensation
—
(4.1)
—
—
—
—
—
—
—
(4.1)
Settlement of
phantom units
513,321
8.2
—
—
—
—
—
—
—
8.2
Modification of
phantom units
—
13.5
—
—
—
—
—
—
—
13.5
Amortization of
phantom units
—
5.7
—
—
—
—
—
—
—
5.7
Balance at
December 31, 2022
79,189,583
$ (525.3) $
0.3
— $
— $
— $
— $
— $
(8.3) $
(533.3)
Other
comprehensive
income
—
—
—
—
—
—
—
—
1.1
1.1
Net income
—
47.1
1.0
—
—
—
—
—
—
48.1
Settlement of tax
withholdings on
equity-based
incentive
compensation
—
(9.7)
—
—
—
—
—
—
—
(9.7)
Settlement of
phantom units
777,780
2.8
—
—
—
—
—
—
—
2.8
Amortization of
phantom units
—
0.7
—
—
—
—
—
—
—
0.7
Balance at
December 31, 2023
79,967,363
$ (484.4) $
1.3
— $
— $
— $
— $
— $
(7.2) $
(490.3)
Settlement of tax
withholdings on
equity-based
incentive
compensation
—
(5.2)
—
—
—
—
—
—
—
(5.2)
Settlement of
phantom units
421,192
9.7
—
—
—
—
—
—
—
9.7
C-Corp
Conversion (1)
(80,388,555)
479.9
(1.3) 80,388,555
0.8
837.6
—
(1,317.0)
—
—
Issuance of
common shares
—
—
— 5,500,000
0.1
(5.5)
—
—
—
(5.4)
Issuance of
warrants
—
—
—
—
—
(7.8)
7.8
—
—
—
Other
comprehensive
income
—
—
—
—
—
—
—
—
0.2
0.2
Net loss
—
—
—
—
—
—
—
(222.0)
—
(222.0)
Settlement of tax
withholdings on
equity-based
incentive
compensation
—
—
—
—
—
(0.2)
—
—
—
(0.2)
Settlement of
restricted stock
units
—
—
—
61,938
—
1.3
—
—
—
1.3
Balance at
December 31, 2024
—
$
—
$
— 85,950,493 $
0.9 $
825.4 $
7.8 $
(1,539.0) $
(7.0) $
(711.9)
(1)
Refer to Note 2 — “Summary of Significant Accounting Policies” for additional information.
See accompanying notes to consolidated financial statements.
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83
CALUMET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2024
2023
2022
(In millions)
Operating activities
Net income (loss)
$
(222.0)
$
48.1
$
(173.3)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
149.0
146.8
98.3
Amortization of turnaround costs
38.0
36.1
23.1
Non-cash interest expense
8.0
5.7
17.6
Debt extinguishment costs
0.4
1.6
41.4
Non-cash RINs (gain) expense
(31.9)
(199.1)
197.5
Unrealized (gain) loss on derivative instruments
5.9
(33.0)
45.9
Loss on impairment and disposal of assets
2.0
3.5
0.7
Equity based compensation
14.6
14.7
17.3
Lower of cost or market inventory adjustment
7.0
33.2
19.4
Other non-cash activities
(7.0)
0.5
2.2
Changes in assets and liabilities
Accounts receivable
8.0
(19.2)
(14.1)
Inventories
16.1
25.1
(190.5)
Prepaid expenses and other current assets
17.9
(25.9)
(5.6)
Turnaround costs
(20.6)
(47.9)
(62.6)
Other assets
(5.6)
(10.2)
—
Accounts payable
1.7
(12.4)
56.9
Accrued interest payable
(5.2)
15.3
8.4
Accrued salaries, wages and benefits
4.0
(17.1)
9.5
Other taxes payable
(1.6)
4.0
(2.1)
Other liabilities
(25.1)
15.3
10.6
Net cash provided by (used in) operating activities
(46.4)
(14.9)
100.6
Investing activities
Additions to property, plant and equipment
(76.7)
(271.8)
(536.2)
Proceeds from sale of property, plant and equipment
—
—
0.2
Net cash used in investing activities
(76.7)
(271.8)
(536.0)
Financing activities
Proceeds from borrowings — revolving credit facility
2,129.2
2,185.0
1,695.1
Repayments of borrowings — revolving credit facility
(1,979.3)
(2,152.3)
(1,591.1)
Proceeds from borrowings — MRL revolving credit agreement
159.1
93.2
—
Repayments of borrowings — MRL revolving credit agreement
(172.1)
(80.2)
—
Proceeds from borrowings — senior notes
554.4
325.0
325.0
Repayments of borrowings — senior notes
(592.5)
(121.0)
(363.1)
Payments on finance lease obligations
(1.1)
(1.0)
(0.9)
Proceeds from inventory financing
671.3
1,712.0
2,166.0
Payments on inventory financing
(708.5)
(1,753.9)
(2,132.6)
Proceeds from sale of redeemable noncontrolling interest in subsidiary
—
—
250.0
Payments for issuance of Preferred Units
—
—
(4.4)
Repayments of borrowings — MRL Credit Facility
—
—
(347.3)
Proceeds from other financing obligations
144.7
102.0
372.9
Payments on other financing obligations
(41.5)
(30.1)
(15.6)
Debt issuance costs
(9.4)
(12.5)
(5.3)
Net cash provided by financing activities
154.3
266.2
348.7
Net increase (decrease) in cash, cash equivalents and restricted cash
31.2
(20.5)
(86.7)
Cash, cash equivalents and restricted cash at beginning of period
14.7
35.2
121.9
Cash, cash equivalents and restricted cash at end of period
$
45.9
$
14.7
$
35.2
Cash and cash equivalents
$
38.1
$
7.9
$
35.2
Restricted cash
$
7.8
$
6.8
$
—
Supplemental disclosure of cash flow information
Interest paid, net of capitalized interest
$
232.0
$
201.9
$
151.4
Supplemental disclosure of non-cash investing activities
Non-cash property, plant and equipment additions
$
30.7
$
31.3
$
136.9
See accompanying notes to consolidated financial statements.
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84
1. Description of the Business
On July 10, 2024, Calumet, Inc., a Delaware corporation (the “Company” or “Calumet”), completed the transactions
contemplated by a Conversion Agreement, dated February 9, 2024 (as amended, the “Conversion Agreement”), among the
Company, Calumet Specialty Products Partners, L.P. (the “Partnership”), Calumet GP, LLC, the general partner of the
Partnership (the “General Partner”), Calumet Merger Sub I LLC (“Merger Sub I”), Calumet Merger Sub II LLC (“Merger
Sub II”) and the other parties thereto, including The Heritage Group (collectively, the “Sponsor Parties”), as amended by
the First Amendment to the Conversion Agreement, dated April 17, 2024 (such transactions, the “Conversion” or the “C-
Corp Conversion”).
Pursuant to the Conversion Agreement, among other things:
●
Merger Sub II merged with and into the Partnership, with the Partnership continuing as the surviving entity and a
wholly owned subsidiary of the Company, and all of the common units representing limited partner interests in
the Partnership (“Common Units”) were exchanged into the right to receive an equal number of shares of
Common Stock (the “Partnership Merger”); and
●
Merger Sub I merged with and into the General Partner, with the General Partner continuing as the surviving
entity and a wholly owned subsidiary of the Company, and all outstanding equity interests of the General Partner
were exchanged into the right to receive an aggregate of 5.5 million shares of Common Stock and 2.0 million
warrants to purchase common stock at an exercise price of $20.00 per share (subject to adjustment) on or prior to
July 10, 2027 (the “GP Merger”).
On July 10, 2024, the Company issued (i) approximately 80.4 million shares of Common Stock to holders of the
Common Units and (ii) 5.5 million shares of Common Stock and 2.0 million warrants to purchase common stock at an
exercise price of $20.00 per share (subject to adjustment) to the Sponsor Parties, in each case, pursuant to the Conversion
Agreement. As of December 31, 2024, the Company was a publicly traded Delaware corporation. The Company’s common
shares are listed on the Nasdaq Global Select Market under the ticker symbol “CLMT.” Refer to Note 2 — “Summary of
Significant Accounting Policies” for additional information.
The Company manufactures, formulates, and markets a diversified slate of specialty branded products and renewable
fuels to customers across a broad range of consumer-facing and industrial markets. Calumet is headquartered in
Indianapolis, Indiana and operates twelve facilities throughout North America.
2. Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements and related notes reflect the accounts of the Company, its wholly-owned
subsidiaries, and its majority-owned subsidiaries. All intercompany profits, transactions and balances have been
eliminated.
Reclassifications
Certain amounts in the prior years’ consolidated financial statements have been reclassified to conform to the
current year presentation.
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85
Use of Estimates
The Company’s consolidated financial statements are prepared in conformity with U.S. generally accepted accounting
principles (“GAAP”) which require management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash include all highly liquid investments with a maturity of three months or less
at the time of purchase. Cash and cash equivalents are deposited primarily in banking institutions with global operations.
We have not experienced any losses in such accounts. We believe we are not exposed to any significant credit risk related
to cash and cash equivalents.
Restricted cash represents cash that is legally restricted under the MRL Term Loan Credit Agreement, and it is
included in prepaid expenses and other current assets in the consolidated balance sheets because it is only available to
make principal and interest payments under the terms of the agreement.
Accounts Receivable
The Company performs periodic credit evaluations of customers’ financial condition and generally does not require
collateral. Accounts receivable are carried at their face amounts. The Company maintains an allowance for credit losses for
estimated losses in the collection of accounts receivable. The Company makes estimates regarding the future ability of its
customers to make required payments based on historical experience, the age of the accounts receivable balances, credit
quality of its customers, current economic conditions, expected future trends and other factors that may affect customers’
ability to pay. Individual accounts are written off against the allowance for credit losses after all reasonable collection
efforts have been exhausted.
The activity in the allowance for credit losses was as follows (in millions):
December 31,
2024
2023
2022
Beginning balance
$
1.2
$
1.3
$
2.0
Provision
(0.1)
(0.1)
(0.7)
Write-offs, net
—
—
—
Ending balance
$
1.1
$
1.2
$
1.3
Inventories
The cost of inventory is recorded using the last-in, first-out (“LIFO”) method. Costs include crude oil and other
feedstocks, labor, processing costs and refining overhead costs. Inventories are valued at the lower of cost or market value.
The replacement cost of these inventories, based on current market values, would have been $49.2 million and $67.8
million higher than the carrying value of inventory as of December 31, 2024 and 2023, respectively.
For the years ended December 31, 2024 and 2023, the Company sold inventory comprised of crude oil, refined
products and renewable feedstocks under Supply and Offtake Agreements as described in Note 7 — “Inventory Financing
Agreements” related to the Great Falls, Shreveport and Montana Renewables facilities.
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86
Inventories consist of the following (in millions):
December 31, 2024
December 31, 2023
Supply and
Supply and
Titled
Offtake
Titled
Offtake
Inventory
Agreements (1)
Total
Inventory
Agreements (1)
Total
Raw materials
$
45.3
$
29.7
$
75.0
$
61.6
$
27.6
$
89.2
Work in process
63.8
33.7
97.5
72.3
36.7
109.0
Finished goods
160.3
83.5
243.8
162.1
79.1
241.2
$
269.4
$
146.9
$
416.3
$
296.0
$
143.4
$
439.4
(1)
Amounts represent LIFO value and do not necessarily represent the value at which the inventory was sold. Please read
Note 7 — “Inventory Financing Agreements” for further information.
Under the LIFO inventory method, the most recently incurred costs are charged to cost of sales and inventories are
valued at the earliest acquisition costs, resulting in a better matching of costs and revenues. For the years ended
December 31, 2024 and 2023, the Company recorded an increase (exclusive of lower of cost or market (“LCM”)
adjustments) of $5.3 million and $2.4 million, respectively, in cost of sales in the consolidated statements of operations due
to the liquidation of inventory layers. For the year ended December 31, 2022, the Company recorded a decrease (exclusive
of LCM adjustments) of $12.8 million in cost of sales in the consolidated statements of operations due to the liquidation of
inventory layers.
In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that
inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. In
periods of rapidly declining prices, LIFO inventories may have to be written down to market value due to the higher costs
assigned to LIFO layers in prior periods. During the years ended December 31, 2024, 2023, and 2022, the Company
recorded an increase in cost of sales in the consolidated financial statements of operations of $7.0 million, $33.2 million,
and $19.4 million, respectively, substantially all of which was the result of declining market prices for renewable
feedstocks at our Montana Renewables facility.
Derivatives
The Company is exposed to fluctuations in the price of numerous commodities, such as crude oil (its principal raw
material), as well as the sales prices of gasoline, diesel, natural gas and jet fuel. Given the historical volatility of
commodity prices, these fluctuations can significantly impact sales, gross profit and net income. Therefore, the Company
utilizes derivative instruments primarily to minimize its price risk and volatility of cash flows associated with the purchase
of crude oil, natural gas, and the sale of fuel products. The Company employs various hedging strategies and does not hold
or issue derivative instruments for trading purposes. For further information, please read Note 9 — “Derivatives.”
On a regular basis, the Company enters into commodity contracts with counterparties for the purchase or sale of crude
oil, blendstocks and various finished products. These contracts usually qualify for the normal purchase / normal sale
exemption under ASC 815 and, as such, are not measured at fair value.
Property, Plant and Equipment
Property, plant and equipment are stated on the basis of cost. Depreciation is calculated using the straight-line method
over the estimated useful lives. Assets under finance leases are amortized over the lesser of the useful life of the asset or
the term of the lease.
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87
Property, plant and equipment, including depreciable lives, consisted of the following (in millions):
December 31,
2024
2023
Land
$
10.2
$
8.9
Buildings and improvements (10 to 40 years)
41.6
40.4
Machinery and equipment (10 to 20 years)
2,503.7
2,460.0
Furniture, fixtures and software (5 to 10 years)
47.5
47.1
Assets under finance leases (1 to 14 years) (1)
8.3
7.4
Construction-in-progress
42.0
39.5
2,653.3
2,603.3
Less accumulated depreciation
(1,214.5)
(1,097.0)
$
1,438.8
$
1,506.3
(1)
Assets under finance leases consist of buildings and machinery and equipment. As of December 31, 2024 and 2023,
finance lease assets are recorded net of accumulated amortization of $5.8 million and $5.0 million, respectively.
Under the composite depreciation method, the cost of partial retirements of a group is charged to accumulated
depreciation. However, when there are dispositions of complete groups or significant portions of groups, the cost and
related accumulated depreciation are retired, and any gain or loss is reflected in earnings.
During 2024, 2023 and 2022, the Company incurred $238.8 million, $225.1 million and $194.5 million, respectively,
of interest expense of which $2.1 million, $3.4 million and $18.6 million, respectively, was capitalized as a component of
property, plant and equipment.
The Company periodically assesses its operations and legal requirements to determine if recognition of an asset
retirement obligation is necessary. The Company has not recorded an asset retirement obligation as of December 31, 2024
or 2023 given the timing of any retirement and related costs are currently indeterminable.
During the years ended December 31, 2024, 2023 and 2022, the Company recorded $142.5 million, $138.6 million and
$88.7 million, respectively, of depreciation expense on its property, plant and equipment. Depreciation expense included
$0.8 million, $0.9 million and $0.7 million for the years ended 2024, 2023 and 2022, respectively, related to the Company’s
finance lease assets.
The Company capitalizes the cost of computer software developed or obtained for internal use. Capitalized software is
amortized using the straight-line method over five years. As of December 31, 2024 and 2023, the Company had $41.9
million and $41.9 million, respectively, of capitalized software costs. As of December 31, 2024 and 2023, the Company
had $41.1 million and $40.5 million, respectively, of accumulated depreciation related to the capitalized software costs.
During the years ended December 31, 2024, 2023 and 2022, the Company recorded $0.6 million, $0.7 million and $5.4
million, respectively, of amortization expense on capitalized computer software.
Goodwill
Goodwill represents the excess of purchase price over fair value of the net assets acquired in various acquisitions.
Please read Note 5 — “Goodwill and Other Intangible Assets” for more information. The Company assesses goodwill for
impairment annually and whenever events or changes in circumstances indicate its carrying value may not be recoverable
in accordance with ASC 350, Intangibles — Goodwill and Other (Topic 350) and ASU 2017-04, Intangibles—Goodwill
and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Under ASC 350, an entity has the option to first
assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is
more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of
events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than
its carrying amount, then performing the impairment test is unnecessary. The Company tests goodwill either quantitatively
or qualitatively for impairment. The Company assessed goodwill for impairment qualitatively for the years ended
December 31, 2024 and 2023, respectively.
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88
In assessing the qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit
is less than its carrying amount, the Company assesses relevant events and circumstances that may impact the fair value
and the carrying amount of the reporting unit. The identification of relevant events and circumstances and how these may
impact a reporting unit’s fair value or carrying amount involve significant judgment and assumptions. The judgment and
assumptions include the identification of macroeconomic conditions, industry and market considerations, cost factors,
overall financial performance and Company specific events and making the assessment on whether each relevant factor
will impact the impairment test positively or negatively and the magnitude of any such impact.
In the first step of the quantitative assessment, the Company’s assets and liabilities, including existing goodwill and
other intangible assets, are assigned to the identified reporting units to determine the carrying value of the reporting units.
Under ASU 2017-04, goodwill impairment testing is done by comparing the fair value of the reporting unit to its carrying
value. If the carrying amount exceeds the fair value, the Company would recognize an impairment charge for the amount
that the reporting unit’s carrying value exceeds the fair value, not to exceed the total amount of goodwill allocated to that
reporting unit.
When performing the quantitative assessment, the fair value of the reporting units is determined using the income
approach. The income approach focuses on the income-producing capability of the reporting unit, measuring the current
value of the reporting unit by calculating the present value of its future economic benefits such as cash earnings, cost
savings, corporate tax structure and product offerings. Value indications are developed by discounting expected cash flows
to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of
inflation, and risks associated with the reporting unit. For more information, please read Note 5 — “Goodwill and Other
Intangible Assets.”
Finite-Lived Intangible Assets
Finite-lived intangible assets consist of intangible assets associated with customer relationships, tradenames, trade
secrets, patents and royalty agreements that were acquired in various acquisitions. The majority of these assets are being
amortized using undiscounted estimated future cash flows over the term of the related agreements. Intangible assets
associated with customer relationships are being amortized using the undiscounted estimated future cash flows method
based upon assumed rates of annual customer attrition. For more information, please read Note 5 — “Goodwill and Other
Intangible Assets.”
Other Noncurrent Assets
Other noncurrent assets include turnaround costs. Turnaround costs represent capitalized costs associated with the
Company’s periodic major maintenance and repairs and the net carrying value of turnaround costs included in other
noncurrent assets in the consolidated balance sheets were $109.5 million and $129.3 million as of December 31, 2024 and
2023, respectively. The Company capitalizes these costs and amortizes the costs on a straight-line basis over the lives of the
turnaround assets which is generally two to five years. These amounts are net of accumulated amortization of $100.5
million and $68.9 million at December 31, 2024 and 2023, respectively. During the years ended December 31, 2024, 2023
and 2022, the Company recorded $38.0 million, $36.1 million, and $23.1 million, respectively, of amortization expense on
its turnaround assets.
Renewable Identification Numbers (“RINs”) Obligation
The Company’s RINs volume obligation (“RVO” or “RINs Obligation”) is an estimated provision if future purchase of
RINs were to be required in order to satisfy the U.S. Environmental Protection Agency’s (“EPA”) requirement to blend
renewable fuels into certain transportation fuel products pursuant to the Renewable Fuel Standard (“RFS”) of the Clean Air
Act (“CAA”). The Company has historically not been obligated to make these purchases. A RIN is a 38-character number
assigned to each physical gallon of renewable fuel produced in or imported into the United States. The EPA sets annual
volume obligations for the percentage of renewable fuels that must be blended into transportation fuels consumed in the
U.S. Compliance is demonstrated by tendering RINs to the EPA documenting that blending has been accomplished or by
obtaining a Small Refinery Exemption (“SRE”) as provided in the Clean Air Act. Prior to 2018, the Company historically
received the Small Refinery Exemption after qualifying on the merits. The Company’s petitions for the Small
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89
Refinery Exemption for compliance years 2018-2022 were included in blanket denials by EPA across the entire industry.
EPA’s denials of Calumet’s 2018-2020 petitions have been overturned in litigation, as described below, and are back
pending with EPA. The Company’s cases challenging EPA’s denials for program years 2021 and 2022 remain pending in
the Fifth Circuit and D.C. Circuit. The 2023 petitions were recently denied by the EPA and are the subject of new legal
proceedings. The 2024-25 petitions have not yet been decided by EPA.
The RVO is a quantity and cannot be settled financially with EPA. The Company accounts for its current period RVO
by multiplying the quantity of RINs shortage (based on actual results) by the period end RINs spot price, which is recorded
as a current liability in the consolidated balance sheets and revalued at the end of each subsequent accounting period,
which produces non-cash mark-to-market adjustments that are reflected in cost of sales in the consolidated statements of
operations (with the exception of RINs for compliance year 2019 related to the San Antonio refinery, which amount is
reflected in other operating expense in the consolidated statements of operations). RINs generated by blending may be sold
or held to offset future RVO. Any gains or losses from RINs sales are recorded in cost of sales in the consolidated
statements of operations.
2018 RVO. In April 2022, EPA issued new decisions denying 36 petitions from small refineries seeking SREs for
program year 2018 that had been remanded by the U.S. Court of Appeals for the D.C. Circuit to EPA. EPA had previously
granted 31 of these 36 petitions in August 2019, including petitions from the Company. Concurrent with the April 2022
denial action, EPA provided an alternate compliance approach to allow these 31 small refineries to meet their 2018
compliance obligations without purchasing or retiring additional RINs. In April 2022, the Company filed a petition for
review of EPA’s denial of the 2018 SRE petition for the Shreveport refinery in the U.S. Court of Appeals for the Fifth
Circuit. In June 2022, the Company filed a petition for review of EPA’s denial of the 2018 SRE petition for the Montana
refinery in the U.S. Court of Appeals for the Ninth Circuit and filed a protective petition for review in the U.S. Court of
Appeals for the D.C. Circuit challenging EPA’s denials of both the Shreveport and Montana refineries’ petitions. Upon a
motion made by EPA, the Ninth Circuit dismissed the Company’s petition for review of the denial of the Montana
refinery’s 2018 SRE petition for improper venue in favor of the D.C. Circuit case. EPA filed a similar motion to dismiss or
transfer in the Fifth Circuit; however, the Fifth Circuit ultimately ordered the merits panel to consider both the merits of the
case and the venue question raised by EPA. These 2018 RVO cases were consolidated with the 2019-2020 RVO cases
described below.
2019-2020 RVO. In June 2022, EPA issued final decisions denying 69 pending petitions from small refineries seeking
SREs for compliance years 2016 to 2021, including petitions submitted by the Company for program years 2019 and 2020,
based on an across-the-board determination that no small refinery suffers disproportionate economic hardship from the
RFS program, a contention which was subsequently rejected by the Government Accountability Office. In August 2022,
the Company filed a petition for review of EPA’s denial of the 2019 and 2020 SRE petitions for the Shreveport refinery in
the U.S. Court of Appeals for the Fifth Circuit, and a petition for review of EPA’s denial of the 2019 and 2020 SRE
petitions for the Montana refinery in the U.S. Court of Appeals for the Ninth Circuit. The Company also filed a protective
petition for review in the U.S. Court of Appeals for the D.C. Circuit challenging both of EPA’s denials. These cases have
been consolidated with the applicable program year 2018 cases. Upon a motion made by EPA, the Ninth Circuit transferred
the Company’s Montana case to the D.C. Circuit. The Fifth Circuit denied EPA’s request to dismiss or transfer the
Shreveport case, ruling that the merits panel would also consider EPA’s argument that the Shreveport refinery case should
be transferred to the D.C. Circuit. The Company filed motions asking the courts to stay the Company’s 2019 and 2020 RFS
obligations while the merits cases are pending. In January 2023, the Fifth Circuit granted the Company’s motion for stay
relating to the Shreveport refinery, and in March 2023, the D.C. Circuit granted the Company’s motion for stay relating to
the Montana refinery.
In November 2023, the Fifth Circuit issued its decision and found that venue is proper in the Fifth Circuit and that
EPA’s denial of the Shreveport refinery’s petitions for program years 2018-2020 was improper. The Fifth Circuit vacated
EPA’s denials and remanded the petitions to EPA. The judicial stay of the Shreveport refinery’s 2019 and 2020 RFS
obligations dissolved when the mandate issued in January 2024, and the refinery’s SRE petitions remain pending on
remand. In July 2024, the D.C. Circuit issued its decision, finding that EPA’s denial of the Montana Refinery’s petitions for
program years 2018-2020 was improper and vacating and remanding EPA’s 2018-2020 denials. The judicial stay of the
Montana refinery’s 2019 and 2020 RFS obligations dissolved when the mandate issued in September 2024, and the
refinery’s SRE petitions remain pending on remand.
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In May 2024, EPA filed a petition for writ of certiorari with the U.S. Supreme Court with respect to only the venue
portion of the Fifth Circuit’s decision. Briefing is complete and the U.S. Supreme Court is scheduled to hear oral arguments
in this case in March 2025.
2021-2022 RVO. In October 2022, Calumet applied for SREs for the 2021 and 2022 compliance years. In July 2023,
EPA issued final decisions denying 26 pending petitions from small refineries seeking SREs for compliance years 2016 to
2023, including the 2021 and 2022 petitions for the Montana and Shreveport refineries, based on the same approach and
analysis described by EPA in its June 2022 denials. The Company then filed petitions for review of the denials with the
Fifth Circuit and D.C. Circuit and filed motions asking the courts to stay the Company’s 2021 and 2022 RFS obligations.
In September 2023, the Fifth Circuit granted the Company’s motion for stay of the Shreveport refinery’s 2021 and 2022
RFS obligations which we expect will remain in effect until the Supreme Court renders its decision; the Company’s case
challenging the denial of the Shreveport SREs for program years 2021 and 2022 remains pending in the Fifth Circuit. In
October 2023, the D.C. Circuit granted the Company’s motion for stay of the Montana refinery’s 2021 and 2022 RFS
obligations. In February 2025, the D.C. Circuit vacated and remanded EPA’s denials of Montana’s SREs for 2021-2022.
2023 RVO. In December 2023, Calumet applied for SREs for the 2023 compliance year for Montana and Shreveport.
In January 2025, the EPA denied the 2023 SRE petitions for both Montana and Shreveport. The Company filed petitions
for review of the denials with the Fifth Circuit and Ninth Circuit and filed motions asking those courts to stay the
Company’s 2023 RFS obligations. In February 2025, the Fifth Circuit granted the Company’s motion for stay of the
Shreveport refinery’s 2023 RFS obligations while the case is pending. The Company’s motion for stay in the Ninth Circuit
remains pending.
2024-2025 RVO. In June 2024, Calumet applied for SREs for the 2024 and 2025 compliance years. EPA has yet to
issue decisions on those SRE petitions.
Expenses related to RFS compliance have the potential to remain a significant expense for the Specialty Products and
Solutions and Montana/Renewables segments. If legal or regulatory changes occur that have the effect of increasing the
RINs Obligation, increasing the market price of RINs, or eliminating or narrowing the availability of SREs, the Company
could be required to purchase additional RINs in the open market, which may materially increase the costs related to RFS
compliance and could have a material adverse effect on the results of operations and liquidity.
As of December 31, 2024 and 2023, the Company had a RINs Obligation recorded on the consolidated balance sheets
of $245.4 million and $277.3 million, respectively.
C-Corp Conversion
As described in Note 1 — “Description of the Business,” on the closing date of the C-Corp Conversion, the Company
issued (i) approximately 80.4 million shares of Common Stock to holders of the Common Units and (ii) 5.5 million shares
of Common Stock and 2.0 million warrants to purchase common stock at an exercise price of $20.00 per share (subject to
adjustment) on or prior to July 10, 2027 to the Sponsor Parties, in each case, pursuant to the Conversion Agreement. The
Company accounted for the C-Corp Conversion as a common control transaction and there were no changes in basis to the
net assets recognized at the closing of the transaction. Further, the C-Corp Conversion did not result in a change in the
reporting entity, and as such, the transaction was accounted for on a prospective basis in the Company’s consolidated
financial statements. The 2.0 million warrants to purchase common stock at an exercise price of $20.00 per share (subject
to adjustment) are included in Stockholders’ Equity on the consolidated balance sheets with a balance of $7.8 million for
the period ended December 31, 2024. Refer to Note 10 — “Fair Value Measurements” for additional information related to
the assumptions and inputs used to determine the fair value of the warrants.
Refer to Note 15 — “Income Taxes” for additional information regarding income tax considerations resulting from the
C-Corp Conversion.
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Impairment of Long-Lived Assets
The Company periodically evaluates the carrying value of long-lived assets to be held and used, including finite-lived
intangible assets, when events or circumstances warrant such a review. The carrying value of a long-lived asset to be held
and used is considered impaired when the anticipated separately identifiable undiscounted cash flows from such an asset
are less than the carrying value of the asset. In such an event, a write-down of the asset would be recorded through a charge
to operations, based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is
determined primarily using anticipated cash flows assumed by a market participant discounted at a rate commensurate with
the risk involved. Long-lived assets to be disposed of other than by sale are considered held and used until disposal.
During the years ended December 31, 2024 and 2023, the Company did not identify any impairment indicators that
suggested the carrying values of its long-lived assets are not recoverable at the asset groups within the Specialty Products
and Solutions, Montana/Renewables, Performance Brands and Corporate segments. As a result of the long-lived asset
impairment assessment performed, no impairment charges were recorded for the years ended December 31, 2024, 2023 and
2022.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue Recognition, which states that revenue is
recognized when control of the promised goods are transferred to the customer, in an amount that reflects the consideration
to which the Company expects to be entitled in exchange for those goods. Please read Note 3 — “Revenue Recognition”
for additional information on our revenue recognition accounting policies and elections.
Revenues associated with transactions commonly called buy/sell contracts, in which the purchase and sale of inventory
with the same counterparty are entered into “in contemplation” of one another, are combined and reported as a net purchase
in cost of sales in the consolidated statements of operations.
Concentrations of Credit Risk
The Company performs periodic credit evaluations of its customers’ financial condition and in some instances requires
cash in advance or letters of credit prior to shipment for domestic orders. For international orders, letters of credit are
generally required, and the Company maintains insurance policies which cover certain export orders. The Company
maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required
payments. The allowance for credit losses is developed based on several factors including historical experience, the age of
the accounts receivable balances, credit quality of the Company’s customers, current economic conditions, expected future
trends and other factors that may affect customers’ ability to pay, which exist as of the balance sheet dates. If the financial
condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required. The Company from time to time has derivative positions with a limited number of
counterparties. The evaluation of these counterparties is performed quarterly in connection with the Company’s ASC 820-
10, Fair Value Measurements and Disclosures, valuations to determine the impact of the counterparty credit risk on the
valuation of its derivative instruments.
Earnings per Common Share
The Company calculates earnings per share under ASC 260-10, Earnings per Share. The Company computes earnings
per common share by dividing net income (loss) attributable to Calumet stockholders by the weighted-average number of
common shares outstanding for the year. Earnings per common share, assuming dilution, is computed by dividing net
income attributable to Calumet stockholders by the weighted-average number of common shares outstanding for the year,
increased by the effect of dilutive securities.
Stock-Based Compensation
For stock-based compensation equity awards, compensation expense is recognized in the Company’s consolidated
financial statements on a straight-line basis over the awards’ vesting periods based on their fair values on the dates of
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grant. The stock-based compensation awards vest over a period not exceeding four years. The amount of compensation
expense recognized at any date is at least equal to the portion of the grant date value of the award that is vested at that date.
For more information, please read Note 12 — “Stock-Based Compensation.”
Stock-based compensation liability awards are awards that are currently expected to be settled in cash on their vesting
dates rather than in common shares (“Liability Awards”). Liability Awards are recorded in accrued salaries, wages and
benefits based on the vested portion of the fair value of the awards on the balance sheet date. The fair value of Liability
Awards is updated at each balance sheet date and changes in the fair value of the vested portions of the Liability Awards
are recorded as increases or decreases to compensation expense. The Company recognizes forfeitures as they occur. Please
read Note 12 — “Stock-Based Compensation” for more information on Liability Awards.
Advertising Expenses
The Company expenses advertising costs as incurred which totaled $10.7 million, $10.6 million and $9.1 million for
the years ended December 31, 2024, 2023, and 2022, respectively. Advertising expenses are reported as selling expenses in
the consolidated statements of operations.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of
deferred tax assets and deferred tax liabilities for the expected future tax consequences of events that have been included in
the financial statements. Under this method, deferred tax assets and deferred tax liabilities are determined on the basis of
the differences between the financial statement and tax bases of assets and liabilities and the expected benefits of utilizing
net operating loss and tax credit carryforwards, using enacted tax rates in effect for the year in which the differences are
expected to reverse. The effect of a change in tax rates on deferred tax assets and deferred tax liabilities is recognized in
income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that these assets are more likely than not to be realized. In
making such a determination, the Company considered all available positive and negative evidence, including future
reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback
potential if permitted under the tax law, and results of recent operations. In the future, if the Company determined that
deferred tax assets would be realized in excess of their net recorded amount, an adjustment would be made to the valuation
allowance, which would reduce the provision for income taxes.
The Company records unrecognized tax benefits in accordance with ASC 740 on the basis of a two-step process in
which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of
the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold,
the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate
settlement with the related tax authority.
The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in
the accompanying consolidated statements of operations. Accrued interest and penalties are included on the related tax
liability line in the consolidated balance sheet.
Recently Adopted Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures.” This ASU requires, among other updates,
enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker,
as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This
ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning
after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior
periods presented in the financial statements. Refer to Note 18 — “Segments and Related Information” for additional
information related to our reportable segments, including disclosure of significant segment expenses.
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Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures.” This ASU amends
existing income tax disclosure guidance, primarily requiring more detailed disclosures for income taxes paid and the
effective tax rate reconciliation. This ASU is effective for fiscal years beginning after December 15, 2024, may be applied
prospectively or retrospectively, and allows for early adoption. The Company is currently evaluating the impact this update
will have on its income tax disclosures in the consolidated financial statements.
3. Revenue Recognition
The following is a description of principal activities from which the Company generates revenue. Revenues are
recognized when control of the promised goods are transferred to the customer, in an amount that reflects the consideration
to which the Company expects to be entitled in exchange for those goods. To determine revenue recognition for
arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:
(i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize
revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to
be within the scope of ASC 606, the Company assesses the goods promised within each contract and determines the
performance obligations and assesses whether each promised good is distinct. The Company then recognizes as revenue
the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance
obligation is satisfied.
Products
The Company manufactures, formulates, and markets a diversified slate of specialty branded products to customers in
various consumer-facing and industrial markets. In addition, the Company produces fuel and fuel related products,
including gasoline, diesel, jet fuel, asphalt, and other fuels products. At our Montana Renewables facility, we process a
variety of geographically advantaged renewable feedstocks into renewable fuels, including: renewable diesel, sustainable
aviation fuel, renewable hydrogen, renewable natural gas, renewable propane, and renewable naphtha. These renewable
fuels are distributed into renewable markets in the western half of North America. The Company also blends, packages and
markets high-performance branded specialty products through its Royal Purple, Bel-Ray, and TruFuel brands.
The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to
be the contracts with a customer. For each contract, the Company considers the promise to transfer products, each of which
are distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates
whether the price is subject to variable consideration such as product returns, rebates or other discounts to determine the
net consideration to which the Company expects to be entitled. The Company transfers control and recognizes revenue
upon shipment to the customer or, in certain cases, upon receipt by the customer in accordance with contractual terms.
Revenue is recognized when obligations under the terms of a contract with a customer are satisfied and control of the
promised goods are transferred to the customer. The contract with the customer states the final terms of the sale, including
the description, quantity and price of each product or service purchased. For fuel products, payment is typically due in full
between 2 to 30 days of delivery or the start of the contract term, such that payment is typically collected 2 to 30 days
subsequent to the satisfaction of performance obligations. For renewable fuel products, payment is typically due in full
between 7 to 14 days of delivery or the start of the contract term, such that payment is typically collected 7 to 14 days
subsequent to the satisfaction of performance obligations. For specialty products, payment is typically due in full between
30 to 90 days of delivery or the start of the contract term, such that payment is typically collected 30 to 90 days subsequent
to the satisfaction of performance obligations. In the normal course of business, the Company does not accept product
returns unless the item is defective as manufactured. The expected costs associated with a product assurance warranty
continues to be recognized as expense when products are sold. The Company does not offer promised services that could
be considered warranties that are sold separately or provide a service in addition to assurance that the related product
complies with agreed upon specifications. The Company establishes provisions based on the methods described in ASC
606 for estimated returns and warranties as variable consideration when determining the transaction price.
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Excise and Sales Taxes
The Company assesses, collects and remits excise taxes associated with the sale of certain of its fuel products.
Furthermore, the Company collects and remits sales taxes associated with certain sales of its products to non-exempt
customers. The Company excludes excise taxes and sales taxes that are collected from customers from the transaction price
in its contracts with customers. Accordingly, revenue from contracts with customers is net of sales-based taxes that are
collected from customers and remitted to taxing authorities.
Shipping and Handling Costs
Shipping and handling costs are deemed to be fulfillment activities rather than a separate distinct performance
obligation.
Cost of Obtaining Contracts
The Company may incur incremental costs to obtain a sales contract, which under ASC 606 should be capitalized and
amortized over the life of the contract. The Company has elected to apply the practical expedient in ASC 340-40-50-5
allowing the Company to expense these costs since the contracts are short-term in nature with a contract term of one year
or less.
Contract Balances
Under product sales contracts, the Company invoices customers for performance obligations that have been satisfied,
at which point payment is unconditional. Accordingly, a product sales contract does not give rise to contract assets or
liabilities under ASC 606. The Company’s receivables, net of allowance for expected credit losses from contracts with
customers as of December 31, 2024, 2023 and 2022, was $241.7 million, $252.4 million and $244.7 million, respectively.
Transaction Price Allocated to Remaining Performance Obligations
The Company’s product sales are short-term in nature with a contract term of one year or less. The Company has
utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price
allocated to remaining performance obligations if the performance obligation is part of a contract that has an original
expected duration of one year or less. Additionally, each unit of product generally represents a separate performance
obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining
performance obligations is not required.
4. Leases
The Company has various operating and finance leases primarily for the use of land, storage tanks, railcars, equipment,
precious metals and office facilities that have remaining lease terms of greater than one year to fifteen years, some of which
include options to extend the lease for up to 31 years, and some of which include options to terminate the lease within
one year.
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Supplemental balance sheet information related to the Company’s leases for the periods presented were as follows (in
millions):
December 31,
December 31,
Assets:
Classification:
2024
2023
Operating lease assets
Other noncurrent assets, net (1)
$
240.2
$
114.4
Finance lease assets
Property, plant and equipment, net (2)
2.5
2.4
Total leased assets
$
242.7
$
116.8
Liabilities:
Current
Operating
Other current liabilities
$
58.8
$
75.6
Finance
Current portion of long-term debt
1.0
1.1
Non-current
Operating
Other long-term liabilities
182.2
39.0
Finance
Long-term debt, less current portion
1.9
1.9
Total lease liabilities
$
243.9
$
117.6
(1)
During the years ended December 31, 2024 and 2023, the Company had additions to its operating lease right of use
assets and operating lease liabilities of approximately $203.7 million and $81.2 million, respectively.
(2)
As of December 31, 2024 and 2023, finance lease assets are recorded net of accumulated amortization of $5.8 million
and $5.0 million, respectively.
Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease
expense related to the Company’s leases for the periods presented were as follows (in millions):
December 31,
Lease Costs:
Classification:
2024
2023
2022
Fixed operating lease cost
Cost of Sales; SG&A Expenses
$
83.6
$
75.6
$
75.4
Short-term operating lease cost (1)
Cost of Sales; SG&A Expenses
8.8
9.5
8.2
Variable operating lease cost (2)
Cost of Sales; SG&A Expenses
4.5
3.6
19.2
Finance lease cost:
Amortization of finance lease assets
Cost of Sales
0.8
0.9
0.7
Interest on lease liabilities
Interest expense
0.2
0.2
1.3
Total lease cost
$
97.9
$
89.8
$
104.8
(1)
The Company’s leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets.
(2)
The Company’s railcar leases typically include a mileage limit the railcar can travel over the life of the lease. For any
mileage incurred over this limit, the Company is obligated to pay an agreed upon dollar value for each mile that is
traveled over the limit.
Operating lease expense included in the consolidated statements of operations was $96.9 million, $88.7 million and
$102.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. Cash paid related to operating lease
obligations approximated lease expense for 2024, 2023 and 2022, respectively.
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As of December 31, 2024, the Company had estimated minimum commitments for the payment of rentals under leases
which, at inception, had a noncancelable term of more than one year, as follows (in millions):
Operating
Finance
Maturity of Lease Liabilities
Leases (1)
Leases (2)
Total
2025
$
75.1
$
1.1
$
76.2
2026
66.8
1.1
67.9
2027
62.5
0.5
63.0
2028
59.5
0.3
59.8
2029
5.8
0.1
5.9
Thereafter
16.8
0.1
16.9
Total
$
286.5
$
3.2
$
289.7
Less: Interest
45.5
0.3
45.8
Present value of lease liabilities
$
241.0
$
2.9
$
243.9
Less obligations due within one year
58.8
1.0
59.8
Long-term lease obligation
$
182.2
$
1.9
$
184.1
(1)
As of December 31, 2024, the Company’s operating lease payments included no material options to extend lease terms
that are reasonably certain of being exercised. The Company has no legally binding minimum lease payments for
leases signed but not yet commenced as of December 31, 2024.
(2)
As of December 31, 2024, the Company’s finance lease payments included no material options to extend lease terms
that are reasonably certain of being exercised. In addition, the Company has no legally binding minimum lease
payments for leases that have been signed but not yet commenced as of December 31, 2024.
Weighted-Average Lease Term and Discount Rate
The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating and
finance leases for the periods presented were as follows:
December 31,
December 31,
Lease Term and Discount Rate:
2024
2023
Weighted-average remaining lease term (years):
Operating leases
4.4
2.6
Finance leases
3.1
3.1
Weighted-average discount rate:
Operating leases
8.1 %
8.6 %
Finance leases
8.0 %
7.3 %
5. Goodwill and Other Intangible Assets
For the years ended December 31, 2024 and 2023, the Company performed its annual goodwill assessment for each of
the years then ended, and determined that the fair value of each of its reporting units with goodwill exceeded its carrying
value. Thus, no impairment charge for goodwill related to the Specialty Products and Solutions segment or Performance
Brands segment was recorded in the consolidated statements of operations for the years ended December 31, 2024 and
2023, respectively. There is no goodwill within the reporting units for the Montana/Renewables segment or the Corporate
segment.
Inputs used to estimate the fair value of the Company’s reporting units are considered Level 3 inputs of the fair value
hierarchy and include the following:
●
The Company’s financial projections for its reporting units are based on its analysis of various supply and
demand factors which include, among other things, industry-wide capacity, its planned utilization rate, end-user
demand, crack spreads, capital expenditures and economic conditions. Such estimates are consistent with those
used in the
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Company’s planning and capital investment reviews and include recent historical prices and published forward
prices.
●
The discount rate used to measure the present value of the projected future cash flows is based on a variety of
factors, including market and economic conditions, operational risk, regulatory risk and political risk. This
discount rate is also compared to recent observable market transactions, if possible.
For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or
in combination could result in a significantly lower or higher fair value measurement.
Changes in goodwill balances for the periods indicated below are as follows (in millions):
Specialty
Products and
Performance
Consolidated
Solutions
Brands
Total
Net balance as of December 31, 2022
$
49.3 $
123.7 $
173.0
Additions
—
—
—
Impairment (1)
—
—
—
Net balance as of December 31, 2023
$
49.3
$
123.7
$
173.0
Additions
—
—
—
Impairment (1)
—
—
—
Net balance as of December 31, 2024
$
49.3
$
123.7
$
173.0
(1)
Total accumulated goodwill impairment as of December 31, 2024 and 2023, is $35.5 million.
Other intangible assets consist of the following (in millions):
Weighted
December 31, 2024
December 31, 2023
Average Life
Accumulated
Accumulated
(Years)
Gross Amount Amortization Gross Amount Amortization
Customer relationships
20
$
181.8 $
(163.3) $
181.8 $
(158.8)
Tradenames
9
26.8
(25.9)
26.8
(24.9)
Trade secrets
11
52.9
(51.8)
52.9
(51.2)
Patents
10
1.6
(1.6)
1.6
(1.6)
Royalty agreements
18
6.1
(4.6)
6.1
(4.2)
17
$
269.2
$
(247.2)
$
269.2
$
(240.7)
Tradenames, trade secrets, patents and royalty agreements are being amortized to properly match expenses with the
undiscounted estimated future cash flows over the terms of the related agreements or the period expected to be benefited.
The costs of agreements with terms allowing for the potential extension of such agreements are being amortized based on
the initial term only. Customer relationships are being amortized to properly match expenses with the undiscounted
estimated future cash flows based upon assumed rates of annual customer attrition. For the years ended
December 31, 2024, 2023 and 2022, the Company recorded amortization expense of intangible assets of $6.5 million, $7.8
million and $9.5 million, respectively.
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As of December 31, 2024, the Company estimates that amortization of intangible assets for the next five years will be
as follows (in millions):
Amortization
Year
Amount
2025
$
4.9
2026
$
3.8
2027
$
3.2
2028
$
2.3
2029
$
1.8
6. Commitments and Contingencies
Contingencies
From time to time, the Company is a party to certain claims and litigation incidental to its business, including claims
made by various taxation and regulatory authorities, such as the Internal Revenue Service, the EPA and the U.S.
Occupational Safety and Health Administration (“OSHA”), as well as various state environmental regulatory bodies and
state and local departments of revenue, as the result of audits or reviews of the Company’s business. In addition, the
Company has property, business interruption, general liability and various other insurance policies that may result in
certain losses or expenditures being reimbursed to the Company.
Environmental
The Company conducts crude oil and specialty refining, blending and terminal operations and such activities are
subject to stringent federal, regional, state and local laws and regulations governing worker health and safety, the discharge
of materials into the environment and environmental protection. These laws and regulations impose obligations that are
applicable to the Company’s operations, such as requiring the acquisition of permits to conduct regulated activities,
restricting the manner in which the Company may release materials into the environment, requiring remedial activities or
capital expenditures to mitigate pollution from former or current operations, requiring the application of specific health and
safety criteria addressing worker protection and imposing substantial liabilities for pollution resulting from its operations.
Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil
and criminal penalties; the imposition of investigatory, remedial or corrective action obligations or the incurrence of capital
expenditures; the occurrence of delays in the permitting, development or expansion of projects and the issuance of
injunctive relief limiting or prohibiting Company activities. Moreover, certain of these laws impose joint and several, strict
liability for costs required to remediate and restore sites where petroleum hydrocarbons, wastes or other materials have
been released or disposed. In addition, new laws and regulations, new interpretations of existing laws and regulations,
increased governmental enforcement or other developments, some of which legal requirements are discussed below, could
significantly increase the Company’s operational or compliance expenditures.
Remediation of subsurface contamination is in process at certain of the Company’s refinery sites and is being overseen
by the appropriate state agencies. Based on current investigative and remedial activities, the Company believes that the soil
and groundwater contamination at these refineries can be controlled or remediated without having a material adverse effect
on the Company’s financial condition. However, such costs are often unpredictable and, therefore, there can be no
assurance that the future costs will not become material.
Occupational Health and Safety
The Company is subject to various laws and regulations relating to occupational health and safety, including the OSH
Act and comparable state laws. These laws and regulations strictly govern the protection of the health and safety of
employees. In addition, OSHA’s hazard communication standard, the EPA’s community right-to-know regulations under
Title III of the federal Comprehensive Environmental Response, Compensation and Liability Act, as amended, and similar
state statutes require the Company to maintain information about hazardous materials used or produced in the Company’s
operations and provide this information to employees, contractors, state and local government authorities and customers.
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The Company maintains safety and training programs as part of its ongoing efforts to promote compliance with applicable
laws and regulations. The Company conducts periodic audits of process safety management systems at each of its locations
subject to this standard. The Company’s compliance with applicable health and safety laws and regulations has required,
and continues to require, substantial expenditures. Changes in occupational safety and health laws and regulations or a
finding of non-compliance with current laws and regulations could result in additional capital expenditures or operating
expenses, as well as civil penalties and, in the event of a serious injury or fatality, criminal charges.
Labor Matters
The Company has approximately 623 employees covered by various collective bargaining agreements, or
approximately 38% of its total workforce of approximately 1,630 employees. These agreements have expiration dates of
December 12, 2028, August 20, 2028, April 30, 2026, July 31, 2026, November 19, 2026, January 31, 2027, and April 30,
2025. The Company has approximately 18 employees, or 1% of its total workforce, who are covered by a collective
bargaining agreement which will expire in less than one year and does not expect any work stoppages.
Other Matters, Claims and Legal Proceedings
The Company is subject to other matters, claims and litigation incidental to its business. The Company has recorded
accruals with respect to certain of its matters, claims and litigation where appropriate, that are reflected in the audited
consolidated financial statements but are not individually considered material. For other matters, claims and litigation, the
Company has not recorded accruals because it has not yet determined that a loss is probable or because the amount of loss
cannot be reasonably estimated. While the ultimate outcome of matters, claims and litigation currently pending cannot be
determined, the Company currently does not expect these outcomes, individually or in the aggregate (including matters for
which the Company has recorded accruals), to have a material adverse effect on its financial position, results of operations
or cash flows. The outcome of any matter, claim or litigation is inherently uncertain, however, and if decided adversely to
the Company, or if the Company determines that settlement of particular litigation is appropriate, the Company may be
subject to liability that could have a material adverse effect on its financial position, results of operations or cash flows.
Standby Letters of Credit
The Company has agreements with various financial institutions for standby letters of credit which have been issued
primarily to vendors. As of December 31, 2024 and 2023, the Company had outstanding standby letters of credit of $45.4
million and $29.9 million, respectively, under its senior secured revolving credit facility (the “revolving credit facility”).
Please read Note 8 — “Long-Term Debt” for additional information regarding the Company’s revolving credit facility. At
December 31, 2024 and 2023, the maximum amount of letters of credit the Company could issue under its revolving credit
facility was subject to borrowing base limitations, with a maximum letter of credit sublimit equal to $255.0 million, which
may be increased with consent of the Agent (as defined in the Credit Agreement) to 90% of revolver commitments then in
effect ($500.0 million at December 31, 2024 and 2023).
As of December 31, 2024 and 2023, the Company had availability to issue letters of credit of approximately $116.1
million and approximately $238.2 million, respectively, under its revolving credit facility.
Crude Oil Supply, Other Feedstocks and Finished Products
Purchase commitments consist primarily of obligations to purchase fixed volumes of crude oil, other feedstocks and
finished products for resale from various suppliers based on current market prices at the time of delivery. The Company is
currently purchasing a majority of its crude oil under month-to-month evergreen contracts or on a spot basis. Certain other
feedstocks are purchased under various term supply agreements.
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As of December 31, 2024, the estimated minimum purchase commitments under the Company’s crude oil, other
feedstock supply and finished product agreements were as follows (in millions):
Year
Commitment
2025
$
111.6
2026
22.2
2027
22.2
2028
22.2
2029
22.2
Thereafter
44.2
Total
$
244.6
Throughput Contract
Prior to 2020, the Company entered into a long-term agreement to transport crude oil at a minimum of 5,000 bpd
through a pipeline, which commenced service in the second quarter of 2020. The agreement also contains a capital
recovery charge that increases 2% per annum. The agreement is for seven years.
As of December 31, 2024, the estimated minimum unconditional purchase commitments, including the capital
recovery charge, under the agreement were as follows (in millions):
Year
Commitment
2025
$
4.0
2026
4.0
2027
2.4
2028
—
Thereafter
—
Total (1)
$
10.4
(1)
As of December 31, 2024, the estimated minimum payments for the unconditional purchase commitments have been
accrued and are included in other current liabilities and other long-term liabilities in the consolidated balance sheets.
This liability was accrued due to the fact that the contract was entered into to supply crude to a divested facility.
7. Inventory Financing Agreements
On January 17, 2024 (the “Effective Date”), the Company and J. Aron entered into a Monetization Master Agreement
(the “Master Agreement”), a related Financing Agreement (the “Financing Agreement”) and a Supply and Offtake
Agreement (together with the Master Agreement and the Financing Agreement, the “Shreveport Supply and Offtake
Agreement”). Pursuant to the Shreveport Supply and Offtake Agreement, J. Aron agreed to, among other things, purchase
from the Company, or extend to the Company, financial accommodations secured by crude oil and finished products
located at the Company’s Shreveport facility on the Effective Date and from time to time, up to maximum volumes
specified for crude oil and categories of finished products, subject to the Company’s repurchase obligations with respect
thereto. The Shreveport Supply and Offtake Agreement replaced the Company’s previous inventory financing agreement
with Macquarie, which terminated on January 17, 2024.
On September 30, 2024, in connection with the closing of the Montana Asset Financing Arrangement, the Company
entered into the Second Amendment to the Monetization Master Agreement with J. Aron and the other parties thereto, in
order to amend the Monetization Master Agreement, dated as of January 17, 2024 and permit the Montana Asset Financing
Arrangement transaction. Refer to Note 8 — “Long-Term Debt” for additional information.
In March 2017, the Company entered into an agreement with Macquarie to support the operations of the Great Falls
refinery (as amended, the “Great Falls Supply and Offtake Agreement”). The Great Falls Supply and Offtake Agreement
terminated on December 13, 2023. The inventories that were previously associated with the Great Falls Supply and Offtake
Agreement were added back to our revolving credit facility borrowing base. Upon termination of the Great Falls Supply
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and Offtake Agreement, the Company recognized a $17.9 million realized loss on derivative instruments, which was
included in gain (loss) on derivative instruments in the consolidated statements of operations for the year ended December
31, 2023.
On October 3, 2023, Montana Renewables, LLC (“MRL”) and Wells Fargo Commodities, LLC (“Wells Fargo”)
entered into (a) an ISDA 2002 Master Agreement (the “Master Agreement”), (ii) a Schedule to the ISDA 2002 Master
Agreement (the “Schedule”), (iii) a Credit Support Annex to the ISDA 2002 Master Agreement (the “Credit Support
Annex”), and (iv) a Renewable Fuel and Feedstock Repurchase Master Confirmation (together with the Master Agreement,
the Schedule and the Credit Support Annex, collectively the “MRL Supply and Offtake Agreement” and, together with the
Shreveport Supply and Offtake Agreement, the “Supply and Offtake Agreements”). Pursuant to the MRL Supply and
Offtake Agreement, Wells Fargo agreed to, among other things, (a) purchase from MRL renewable feedstocks and finished
products located at MRL’s Great Falls facility, subject to MRL’s repurchase obligations with respect thereto, and (b)
provide certain financial accommodations to MRL secured by liens on certain renewable feedstocks and finished products
owned by MRL. The MRL Supply and Offtake Agreement replaced MRL’s previous inventory financing agreement with
Macquarie, which terminated on October 3, 2023. Upon termination of the inventory financing agreement with Macquarie,
the Company recognized a $7.7 million realized gain on derivative instruments, which was included in gain (loss) on
derivative instruments in the consolidated statements of operations for the year ended December 31, 2023.
On February 18, 2025, the Company repaid in full the outstanding obligations of approximately $32.5 million under
the MRL Supply and Offtake Agreement. Refer to Note 21 — “Subsequent Events” for additional information.
While title to certain inventories will reside with the counterparties to the arrangements, the Supply and Offtake
Agreements are accounted for by the Company similar to a product financing arrangement; therefore, the inventories sold
to the counterparties will continue to be included in the Company’s consolidated balance sheets until processed and sold to
a third party.
For the years ended December 31, 2024, 2023 and 2022, the Company incurred an expense of $19.0 million,
$32.0 million, and $30.6 million, respectively, for financing costs related to the Supply and Offtake Agreements, which are
included in interest expense in the Company’s consolidated statements of operations.
The Company’s inventory financing arrangement with Macquarie for the Company’s Shreveport facility in effect as of
December 31, 2023, included a deferred payment arrangement (the “Deferred Payment Arrangement”) whereby the
Company could defer payments on just-in-time crude oil purchases from Macquarie owed under the agreements up to the
value of the collateral provided (90% of the collateral was inventory). The deferred amounts under the Deferred Payment
Arrangement bore interest at a rate equal to the SOFR plus 3.25% per annum. Amounts outstanding under the Deferred
Payment Arrangement were included in obligations under inventory financing agreements in the Company’s consolidated
balance sheets. Changes in the amount outstanding under the Deferred Payment Arrangement were included within cash
flows from financing activities in the consolidated statements of cash flows. As of December 31, 2023, the Company had
$14.1 million of deferred payments outstanding for the inventory financing arrangements with Macquarie then in effect.
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8. Long-Term Debt
Long-term debt consisted of the following (in millions):
December 31, December 31,
2024
2023
Borrowings under amended and restated senior secured revolving credit agreement with
third-party lenders, interest payments quarterly, borrowings due January 2027, weighted
average interest rates of 7.5% and 7.4% for the year ended December 31, 2024 and the
year ended December 31, 2023, respectively.
$
286.6
$
136.7
Borrowings under amended secured MRL revolving credit agreement with third-party
lender, interest payments quarterly, borrowings due November 2027, weighted average
interest rate of 7.3% and 11.2% for the year ended December 31, 2024 and the year
ended December 31, 2023, respectively.
—
13.0
Borrowings under the 2024 Secured Notes, interest at a fixed rate of 9.25%, interest
payments semiannually, borrowings due July 2024, effective interest rate of 9.5% for the
year ended December 31, 2023. (1)
—
179.0
Borrowings under the 2025 Notes, interest at a fixed rate of 11.0%, interest payments
semiannually, borrowings due April 2025, effective interest rate of 11.4% for the year
ended December 31, 2024 and the year ended December 31, 2023.
—
413.5
Borrowings under the 2026 Notes, interest at a fixed rate of 11.0%, interest payments
semiannually, borrowings due July 2027, effective interest rate of 11.1% for the year
ended December 31, 2024.
354.4
—
Borrowings under the 2027 Notes, interest at a fixed rate of 8.125%, interest payments
semiannually, borrowings due July 2027, effective interest rate of 8.3% for the year
ended December 31, 2024 and the year ended December 31, 2023.
325.0
325.0
Borrowings under the 2028 Notes, interest at a fixed rate of 9.75%, interest payments
semiannually, borrowings due July 2028, effective interest rate of 10.2% and 10.0% for
the year ended December 31, 2024 and the year ended December 31, 2023, respectively.
325.0
325.0
Borrowings under the 2029 Secured Notes, interest at a fixed rate of 9.25%, interest
payments semiannually, borrowings due July 2029, effective interest rate of 9.4% for the
year ended December 31, 2024.
200.0
—
MRL Term Loan Credit Agreement
73.7
74.4
Shreveport terminal asset financing arrangement
42.1
50.8
Montana terminal asset financing arrangement
30.4
—
Montana refinery asset financing arrangement
108.7
—
MRL asset financing arrangements
368.1
384.6
Finance lease obligations, at various interest rates, interest and principal payments
monthly through June 2028
2.9
3.0
Less unamortized debt issuance costs (2)
(14.4)
(16.1)
Less unamortized discounts
(2.3)
(3.5)
Total debt
$
2,100.2
$
1,885.4
Less current portion of long-term debt
35.5
55.7
Total long-term debt
$
2,064.7
$
1,829.7
(1)
As of December 31, 2023, $149.0 million of outstanding borrowings under the 2024 Secured Notes were excluded
from current liabilities, as the outstanding borrowings were obligated to be redeemed, conditioned upon, on or before
March 9, 2024, the completion of a private placement of at least $200.0 million aggregate principal amount of the
Company’s senior debt securities.
(2)
Deferred debt issuance costs are being amortized by the effective interest rate method over the lives of the related debt
instruments. These amounts are net of accumulated amortization of $31.6 million and $26.6 million at
December 31, 2024 and 2023, respectively.
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Senior Notes
9.25% Senior Secured First Lien Notes due 2029 (the “2029 Secured Notes”)
On March 7, 2024, the Company issued and sold $200.0 million in aggregate principal amount of 2029 Secured Notes
in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The
2029 Secured Notes were issued at par for net proceeds of $199.0 million, after deducting transaction expenses. The
Company used the net proceeds from the private placement of the 2029 Secured Notes, together with cash on hand, to
redeem all of its outstanding 9.25% Senior Secured First Lien Notes due 2024 (the “2024 Secured Notes”) and
$50.0 million aggregate principal amount of its outstanding 11.00% Senior Notes due 2025 (the “2025 Notes”). The
Company redeemed $50.0 million aggregate principal amount of its outstanding 2025 Notes on April 15, 2024. Interest on
the 2029 Secured Notes is paid semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2024.
9.75% Senior Notes due 2028 (the “2028 Notes”)
On June 27, 2023, the Company issued and sold $325.0 million in aggregate principal amount of 2028 Notes, in a
private placement pursuant to Section 4(a)(2) of the Securities Act to eligible purchasers at par. The Company received net
proceeds of $319.1 million, after deducting the initial purchasers’ discount and offering expenses, which the Company used
a portion of the net proceeds to fund offers (collectively, the “Tender Offers”) to purchase (i) any and all of its outstanding
$200.0 million in aggregate principal amount of 2024 Secured Notes (as defined below) and (ii) up to $100.0 million in
aggregate principal amount of its outstanding 2025 Notes (as defined below) and pay related premiums and expenses, with
the remaining net proceeds to be used for general Company purposes, including debt repayment. On June 28, 2023, in
connection with the early settlement of the Tender Offers, the Company used approximately $125.5 million (excluding
accrued and unpaid interest and related expenses) of the proceeds from the offering of the 2028 Notes to fund the
repurchase of (i) approximately $21.0 million in aggregate principal amount of 2024 Secured Notes and (ii) $100.0 million
in aggregate principal amount of the 2025 Notes and pay related premiums. Interest on the 2028 Notes is paid semiannually
in arrears on January 15 and July 15 of each year, beginning on July 15, 2024.
8.125% Senior Notes due 2027 (the “2027 Notes”)
On January 20, 2022, the Company issued and sold $325.0 million in aggregate principal amount of 2027 Notes, in a
private placement pursuant to Section 4(a)(2) of the Securities Act to eligible purchasers at par. The Company received net
proceeds of $319.1 million, after deducting the initial purchasers’ discount and offering expenses, which the Company
used, along with cash on hand, to fund the redemption of $325.0 million aggregate principal amount of its 2023 Senior
Notes at a redemption price of par, plus accrued and unpaid interest to the redemption date of February 11, 2022. In
conjunction with the redemption of the 2023 Senior Notes, the Company recorded a loss from debt extinguishment of $1.0
million, which is reflected in loss from debt extinguishment in the consolidated statements of operations for the year ended
December 31, 2022. Interest on the 2027 Notes is paid semiannually in arrears on January 15 and July 15 of each year,
beginning on July 15, 2022.
11.00% Senior Notes due 2026 (the “2026 Notes”)
On October 23, 2024, the Company, together with the Partnership and Calumet Finance Corp., wholly owned
subsidiaries of the Company (collectively, the “Issuers”), entered into a Support Agreement (the “Support Agreement”)
with holders (the “Supporting Holders”) of approximately 69% of the outstanding aggregate principal amount of the 2025
Notes. Pursuant to the Support Agreement, the Supporting Holders agreed, subject to the terms and conditions set forth
therein, (i) to validly tender their 2025 Notes in the Exchange Offer (as defined below), (ii) not to withdraw or revoke any
2025 Notes tendered in the Exchange Offer and (iii) to cooperate with and support the Issuers’ efforts to consummate the
Exchange Offer.
On October 23, 2024, the Issuers, with the support of the Supporting Holders, commenced a private exchange offer
(the “Exchange Offer”) to certain eligible holders to exchange any and all of the outstanding 2025 Notes for newly issued
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11.00% Senior Notes due 2026 (the “New Notes”), upon the terms and subject to the conditions set forth in the Offering
Memorandum, dated October 23, 2024.
11.00% Senior Notes due 2025 (the “2025 Notes”)
On October 11, 2019, the Company issued and sold $550.0 million in aggregate principal amount of 11.00% Senior
Notes due April 15, 2025, in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), to eligible purchasers at par. The Company received net proceeds of $539.9 million net of initial
purchasers’ fees and estimated expenses, which it used, along with revolver borrowings and cash on hand, to fund the
redemption of $761.2 million in aggregate principal amount of outstanding 6.50% Notes due 2021. Interest on the 2025
Notes is paid semiannually in arrears on April 15 and October 15 of each year.
On July 6, 2020, the Company commenced a consent solicitation to holders of the 2025 Notes for amendments to the
indenture governing the 2025 Notes to allow for the consummation of the 2024 Notes Exchange Transaction. On August 5,
2020, the Company executed the First Supplemental Indenture to the indenture governing the 2025 Notes to allow the 2024
Notes Exchange Transaction.
During the year ended December 31, 2024, the Company exchanged $354.4 million aggregate principal amount of its
2025 Notes for newly issued 2026 Notes and repurchased $59.1 million aggregate principal amount of its 2025 Notes, plus
accrued and unpaid interest, using $50.0 million of proceeds from the issuance of the 2029 Notes, together with $9.1
million of borrowings under the Company’s revolving credit facility.
9.25% Senior Secured First Lien Notes due 2024 (the “2024 Secured Notes”)
On August 5, 2020, we consummated a transaction whereby we exchanged approximately $200.0 million aggregate
principal amount of our outstanding 2022 Notes for $200.0 million aggregate principal amount of newly issued 2024
Secured Notes, approximately at par (the “2024 Notes Exchange Transaction”). Interest on the 2024 Secured Notes is paid
semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2021. The 2024 Secured
Notes are secured by a first priority lien (subject to certain exceptions) on all the fixed assets that secure the Company’s
obligations under their secured hedge agreements, as governed by the Collateral Trust Agreement.
On March 7, 2024, the Company redeemed $179.0 million aggregate principal amount, plus accrued and unpaid
interest thereon up to, but not including the respective transaction date, of the 2024 Secured Notes with the net proceeds
from the private placement of the 2029 Secured Notes.
Senior Notes
The 2025 Notes, 2026 Notes, 2027 Notes, 2028 Notes, and the 2029 Secured Notes (collectively, the “Senior Notes”)
are subject to certain automatic customary releases, including the sale, disposition, or transfer of capital stock or
substantially all of the assets of a subsidiary guarantor, designation of a subsidiary guarantor as unrestricted in accordance
with the applicable indenture, exercise of legal defeasance option or covenant defeasance option, liquidation or dissolution
of the subsidiary guarantor and a subsidiary guarantor ceases to both guarantee other Company debt and to be an obligor
under the revolving credit facility. The Company’s operating subsidiaries may not sell or otherwise dispose of all or
substantially all of their properties or assets to, or consolidate with or merge into, another company if such a sale would
cause a default under the indentures governing the Senior Notes.
The indentures governing the Senior Notes contain covenants that, among other things, restrict the Company’s ability
and the ability of certain of the Company’s subsidiaries to: (i) sell assets; (ii) pay distributions on, redeem or repurchase the
Company’s equity or redeem or repurchase its subordinated debt; (iii) make investments; (iv) incur or guarantee additional
indebtedness or issue preferred equity; (v) create or incur certain liens; (vi) enter into agreements that restrict distributions
or other payments from the Company’s restricted subsidiaries to the Company; (vii) consolidate, merge or transfer all or
substantially all of the Company’s assets; (viii) engage in transactions with affiliates and (ix) create unrestricted
subsidiaries. These covenants are subject to important exceptions and qualifications. At any time when the Senior
Notes are rated investment grade by either Moody’s Investors Service, Inc. (“Moody’s”) or S&P Global Ratings
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(“S&P”) and no Default or Event of Default, each as defined in the indentures governing the Senior Notes, has occurred
and is continuing, many of these covenants will be suspended. As of December 31, 2024, the Company was in compliance
with all covenants under the indentures governing the Senior Notes.
Montana Refinery Asset Financing Arrangement
On September 30, 2024, Calumet Montana Refining, LLC (“Calumet Montana”), a subsidiary of the Company, entered
into a Master Lease Agreement (together with Equipment Schedule No. 1 thereto) with Stonebriar Commercial Finance
LLC (“Stonebriar”) related to a sale and leaseback transaction (the “Montana Refinery Asset Financing Arrangement”).
Pursuant to the Montana Refinery Asset Financing Arrangement, Calumet Montana sold to and leased back from
Stonebriar certain equipment comprising the specialty asphalt refinery located in Great Falls, Montana (the “Refinery
Assets”), for a total purchase price of up to $150.0 million. Calumet Montana received $110.0 million of the total purchase
price on September 30, 2024 and the remaining purchase price of $40.0 million on February 18, 2025 in connection with
the funding of the first tranche of approximately $782 million under the DOE Facility. Please refer to Note 21 —
“Subsequent Events” for additional information.
The Company has recorded the Montana Refinery Asset Financing Arrangement as a financial liability in the
consolidated balance sheets.
MRL Asset Financing Arrangements
On August 5, 2022, Montana Renewables, LLC (“MRL”), a wholly owned subsidiary of the Company, entered into
Equipment Schedule No. 2 (the “Equipment Schedule”) and an Interim Funding Agreement (the “Funding Agreement”)
with Stonebriar Commercial Finance LLC (“Stonebriar”). The Equipment Schedule and the Funding Agreement each
constitute a schedule under the Master Lease Agreement (the “Lease Agreement”) dated as of December 31, 2021 between
MRL and Stonebriar. The Equipment Schedule provides that Stonebriar will purchase from and lease back to MRL a
hydrocracker, intended to produce renewable diesel and related products, for a purchase price of $250.0 million. The
Funding Agreement provides $100.0 million in financing for the design and construction of a feedstock pre-treater facility
and $50.0 million for the construction of a hydrogen plant. The transactions with Stonebriar described in this paragraph are
referred to herein as the “MRL Asset Financing Arrangements.”
On September 30, 2024, MRL entered into the Lease Amendment (the “MRL Lease Amendment”) with Stonebriar to
amend Equipment Schedule No. 1, dated as of December 30, 2022, Equipment Schedule No. 2, dated as of August 5, 2022,
and Equipment Schedule No. 3, dated as of September 29, 2023 (each, an “Equipment Schedule” and, collectively, the
“Equipment Schedules”). Each Equipment Schedule sets forth lease terms that incorporate part of that certain Master Lease
Agreement, dated as of December 31, 2021, by and among MRL and Stonebriar. The MRL Lease Amendment amended
each Equipment Schedule to, among other changes, permit an additional early termination option contingent upon
successful additional financing by MRL.
The Company has recorded the MRL asset financing arrangements as a financial liability in the consolidated balance
sheets.
Fourth, Fifth, Sixth, and Seventh Amendments to Third Amended and Restated Senior Secured Revolving Credit
Facility
On January 17, 2024, the Company entered into the Fourth Amendment to its revolving credit facility (the “Credit
Agreement”) governing its senior secured revolving credit facility maturing in January 2027, which provides maximum
availability of credit under the revolving credit facility of $650.0 million, including a FILO tranche, subject to borrowing
base limitations, and includes a $500.0 million incremental uncommitted expansion feature. Lenders under the revolving
credit facility have a first priority lien on, among other things, the Company’s accounts receivable, inventory and
substantially all of its cash (collectively, the “Credit Agreement Collateral”).
On July 10, 2024, in connection with the completion of the Conversion, the Company entered into the Fifth
Amendment to the Credit Agreement to among other changes, (i) reflect the addition of the Company and the General
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Partner as additional borrowers under the Credit Agreement, (ii) reflect the addition of the Company and the General
Partner as additional grantors of security interests in their respective assets that constitute Collateral (as defined in the
Credit Agreement, as amended) to secure the obligations under the Credit Agreement and related documents, (iii) transition
certain responsibilities from the Partnership to the Company, including to designate the Company as the successor
Borrower Agent (as defined in the Credit Agreement, as amended), and (iv) replace Canadian Dealer Offered Rate, or
CDOR, with Term Canadian Overnight Repo Rate Average, or Term CORRA, as an alternate currency rate for which
Alternate Swingline Loans denominated in Canadian Dollars may be borrowed under the Credit Agreement (each as
defined in the Credit Agreement, as amended), in each case, on the terms and conditions set forth in the Fifth Amendment.
On September 30, 2024, in connection with the Montana Refinery Asset Financing Arrangement transaction, the
Company entered into the Consent and Sixth Amendment (the “Sixth Amendment”) to the Credit Agreement. The Sixth
Amendment amended the Credit Agreement to, among other changes, (i) permit the Montana Refinery Asset Financing
Arrangement transaction, and (ii) to remove the Refinery Assets from the determination of the borrowing base under the
Credit Agreement, on the terms and conditions set forth in the Sixth Amendment.
On January 6, 2025, the Company entered into the Seventh Amendment to the Credit Agreement to allow for
permitted additional investments in MRHL not to exceed $170.0 million in an aggregate amount at any time outstanding in
connection with the DOE Facility.
The borrowing capacity at December 31, 2024, under the revolving credit facility was approximately $448.1 million.
As of December 31, 2024, the Company had $286.6 million of outstanding borrowings under the revolving credit facility
and outstanding standby letters of credit of $45.4 million, leaving approximately $116.1 million of unused capacity.
The revolving credit facility contains various covenants that limit, among other things, the Company’s ability to: incur
indebtedness; grant liens; dispose of certain assets; make certain acquisitions and investments; redeem or prepay other debt
or make other restricted payments such as distributions to stockholders; enter into transactions with affiliates; and enter into
a merger, consolidation or sale of assets. Further, the revolving credit facility contains a springing financial covenant which
provides that only if the Company’s availability to borrow loans under the revolving credit facility falls below the sum of
(a) the greater of (i) (x) 15% of the borrowing base then in effect at any time that the refinery asset borrowing base
component is greater than $0 and (y) 10% of the borrowing base then in effect at any time that the refinery asset borrowing
base component is equal to $0 and (ii) $45.0 million (which amount is subject to certain increases) plus (b) the amount of
FILO Loans outstanding, then we will be required to maintain as of the end of each fiscal quarter a Fixed Charge Coverage
Ratio (as defined in the Credit Agreement) of at least 1.0 to 1.0. As of December 31, 2024, the Company was in
compliance with all covenants under the revolving credit facility.
Amendment No. 1 to MRL Revolving Credit Agreement
On November 2, 2022 (the “Effective Date”), MRL entered into, as borrower, a Credit Agreement (the “MRL
Revolving Credit Agreement”) with Montana Renewables Holdings LLC (“MRHL”), the parent company of MRL, and
Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent and lender, which MRL Revolving Credit
Agreement provides for a secured revolving credit facility in the maximum amount of $90.0 million outstanding, with the
option to request additional commitments of up to $15.0 million, and with a maturity date of November 2, 2027. The
borrowing capacity at December 31, 2024, under the MRL Revolving Credit Agreement was approximately $24.0 million.
As of December 31, 2024, MRL had no outstanding borrowings under the MRL Revolving Credit Agreement and no
outstanding standby letters of credit, leaving approximately $24.0 million of unused capacity.
Amendment No. 1 to MRL Term Loan Credit Agreement
On April 19, 2023, MRL and MRHL entered into a Credit Agreement (the “MRL Term Loan Credit Agreement”) with
a group of financial institutions, including I Squared Capital and Delaware Trust Company, as administrative agent, that
provides for a $75.0 million term loan facility with a maturity date of April 19, 2028 (the “Maturity Date”). The MRL
Term Loan Credit Agreement provides for a variable interest rate based on the SOFR plus 6.0% to 7.3% per annum. The
borrowings under the MRL Term Loan Credit Agreement are repayable in quarterly installments commencing on June 30,
2023, in an amount equal to 0.25% of the outstanding principal amount under the MRL Term Loan Credit Agreement as
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of each quarterly payment date, plus additional principal payments to the extent MRL has excess cash flows, pursuant to
the terms of the MRL Term Loan Credit Agreement. The remaining borrowings under the MRL Term Loan Credit
Agreement are repayable on the Maturity Date.
On July 3, 2024, MRL and MRHL entered into Amendment No. 1 and waiver (the “Amendment”) to the MRL Term
Loan Credit Agreement. Pursuant to the Amendment, I Squared and Delaware Trust Company agreed to (i) waive MRL’s
obligation to comply with the net total leverage ratio covenant under the MRL Term Loan Credit Agreement (the
“Leverage Ratio Covenant”) for the quarter ended June 30, 2024 and (ii) amend the Leverage Ratio Covenant for the
quarter ending September 30, 2024 to determine MRL’s compliance with the Leverage Ratio Covenant based on
annualized EBITDA (as defined in the MRL Term Loan Credit Agreement) for such quarter rather than EBITDA for the
12-month period ending September 30, 2024.
Master Derivative Contracts
The Company’s payment obligations under all of the Company’s master derivatives contracts for commodity hedging
generally are secured by a first priority lien on the Company’s real property, plant and equipment, fixtures, intellectual
property, certain financial assets, certain investment property, commercial tort claims, chattel paper, documents,
instruments and proceeds of the foregoing (including proceeds of hedge arrangements). The Company had no additional
letters of credit or cash margin posted with any hedging counterparty as of December 31, 2024. The Company’s master
derivatives contracts and Collateral Trust Agreement (as defined below) continue to impose a number of covenant
limitations on the Company’s operating and financing activities, including limitations on liens on collateral, limitations on
dispositions of collateral and collateral maintenance and insurance requirements.
Collateral Trust Agreement
The Company has a collateral trust agreement (the “Collateral Trust Agreement”) which governs how various secured
Company creditors, including secured hedging counterparties, our creditor on a forward purchase contract for physical
commodities, and holders of our 2029 Secured Notes share collateral pledged as security for the payment of respective
payment obligations to them. The Collateral Trust Agreement limits to $150.0 million the extent to which forward purchase
contracts for physical commodities are covered by, and secured under, the Collateral Trust Agreement and the Parity Lien
Security Documents (as defined in the Collateral Trust Agreement). There is no such limit on financially settled derivative
instruments used for commodity hedging. Subject to certain conditions set forth in the Collateral Trust Agreement, the
Company has the ability to add secured parties from time to time.
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108
Maturities of Long-Term Debt
As of December 31, 2024, principal payments on debt obligations and future minimum rentals on finance lease
obligations are as follows (in millions):
Year
Maturity
2025
$
43.5
2026
408.2
2027
679.0
2028
433.4
2029
241.3
Thereafter
312.9
Total
$
2,118.3
(1)
9. Derivatives
The Company is exposed to price risks due to fluctuations in the price of crude oil, refined products, natural gas and
precious metals. The Company uses various strategies to reduce its exposure to commodity price risk. The strategies to
reduce the Company’s risk utilize both physical forward contracts and financially settled derivative instruments, such as
swaps, collars, options and futures, to attempt to reduce the Company’s exposure with respect to:
●
crude oil purchases and sales;
●
fuel product sales and purchases;
●
natural gas purchases;
●
precious metals purchases; and
●
fluctuations in the value of crude oil between geographic regions and between the different types of crude oil such
as New York Mercantile Exchange West Texas Intermediate (“NYMEX WTI”), Light Louisiana Sweet, Western
Canadian Select (“WCS”), WTI Midland, Mixed Sweet Blend, Magellan East Houston and ICE Brent.
The Company manages its exposure to commodity markets, credit, volumetric and liquidity risks to manage its costs
and volatility of cash flows as conditions warrant or opportunities become available. These risks may be managed in a
variety of ways that may include the use of derivative instruments. Derivative instruments may be used for the purpose of
mitigating risks associated with an asset, liability and anticipated future transactions and the changes in fair value of the
Company’s derivative instruments will affect its earnings and cash flows; however, such changes should be offset by price
or rate changes related to the underlying commodity or financial transaction that is part of the risk management strategy.
The Company does not speculate with derivative instruments or other contractual arrangements that are not associated with
its business objectives.
Speculation is defined as increasing the Company’s natural position above the maximum position of its physical assets
or trading in commodities, currencies or other risk bearing assets that are not associated with the Company’s business
activities and objectives. The Company’s positions are monitored routinely by a risk management committee to ensure
compliance with its stated risk management policy and documented risk management strategies. All strategies are reviewed
on an ongoing basis by the Company’s risk management committee, which will add, remove or revise strategies in
anticipation of changes in market conditions and/or its risk profiles. Such changes in strategies are to position the Company
in relation to its risk exposures in an attempt to capture market opportunities as they arise.
As of December 31, 2024 and 2023, the Company was obligated to repurchase crude oil and refined products from its
counterparties, then in effect, at the termination of the Supply and Offtake Agreements in certain scenarios. The Company
has determined that the redemption feature on the initially recognized liability related to the Supply and Offtake
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Agreements is an embedded derivative indexed to commodity prices. As such, the Company has accounted for this
embedded derivative at fair value with changes in the fair value, if any, recorded in gain (loss) on derivative instruments in
the Company’s consolidated statements of operations. Please read Note 7 — “Inventory Financing Agreements" for
additional information.
The Company recognizes all derivative instruments at their fair values as either current assets or derivative liabilities
or other noncurrent assets, net or other long-term liabilities in the consolidated balance sheets (please read Note 10 — “Fair
Value Measurements”). Fair value includes any premiums paid or received and unrealized gains and losses. Fair value does
not include any amounts receivable from or payable to counterparties, or collateral provided to counterparties. Derivative
asset and liability amounts with the same counterparty are netted against each other for financial reporting purposes in
accordance with the provisions of our master netting arrangements.
The following tables summarize the Company’s gross fair values of its derivative instruments, presenting the impact of
offsetting derivative assets in the Company’s consolidated balance sheets (in millions):
December 31, 2024
December 31, 2023
Gross
Net Amounts
Gross
Net Amounts
Amounts
of Assets
Amounts
of Assets
Gross
Offset in the
Presented
Gross
Offset in the
Presented
Amounts of
Consolidated
in the
Amounts of
Consolidated
in the
Balance Sheet
Recognized
Balance
Consolidated
Recognized
Balance
Consolidated
Location
Assets
Sheets
Balance Sheets
Assets
Sheets
Balance Sheets
Derivative instruments not designated as hedges:
Specialty Products and Solutions segment:
Crack spread swaps
Derivative assets /
Other noncurrent
assets, net
$
—
$
—
$
—
$
11.6
$
—
$
11.6
Total derivative instruments
$
—
$
—
$
—
$
11.6
$
—
$
11.6
The following tables summarize the Company’s gross fair values of its derivative instruments, presenting the impact of
offsetting derivative liabilities in the Company’s consolidated balance sheets (in millions):
December 31, 2024
December 31, 2023
Net Amounts
Gross
of Liabilities
Gross
Net Amounts
Amounts
Presented in
Amounts
of Liabilities
Gross
Offset in the
the
Gross
Offset in the
Presented in
Amounts of
Consolidated
Consolidated
Amounts of
Consolidated
the
Balance Sheet
Recognized
Balance
Balance
Recognized
Balance
Consolidated
Location
Liabilities
Sheets
Sheets
Liabilities
Sheets
Balance Sheets
Derivative instruments not designated as hedges:
Specialty Products and Solutions segment:
Inventory financing
obligation
Obligations under
inventory financing
agreements
$
—
$
5.7
$
5.7
$
(52.5)
$
—
$
(52.5)
Total derivative instruments
$
—
$
5.7
$
5.7
$
(52.5)
$
—
$
(52.5)
Certain of the Company’s outstanding derivative instruments are subject to credit support agreements with the
applicable counterparties which contain provisions setting certain credit thresholds above which the Company may be
required to post agreed-upon collateral, such as cash or letters of credit, with the counterparty to the extent that the
Company’s mark-to-market net liability, if any, on all outstanding derivatives exceeds the credit threshold amount per such
credit support agreement. The majority of the credit support agreements covering the Company’s outstanding derivative
instruments also contain a general provision stating that if the Company experiences a material adverse change in its
business, in the reasonable discretion of the counterparty, the Company’s credit threshold could be lowered by such
counterparty. The Company does not expect that it will experience a material adverse change in its business. The cash flow
impact of the Company’s derivative activities are included within cash flows from operating activities in the consolidated
statements of cash flows.
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110
Derivative Instruments Not Designated as Hedges
For derivative instruments not designated as hedges, the change in fair value of the asset or liability for the period is
recorded to gain (loss) on derivative instruments in the consolidated statements of operations. Upon the settlement of a
derivative not designated as a hedge, the gain or loss at settlement is recorded to gain (loss) on derivative instruments in the
consolidated statements of operations. The Company previously entered into crack spread swaps that were not designated
as cash flow hedges for accounting purposes. However, these instruments provide economic hedges of the purchases and
sales of the Company’s natural gas, crude oil, gasoline and refined products.
The Company recorded the following gains (losses) in its consolidated statements of operations related to its derivative
instruments not designated as hedges (in millions):
Amount of Realized
Loss Recognized in Gain (Loss) on
Amount of Unrealized Gain (Loss)
Derivative
Recognized in Gain (Loss) on Derivative
Instruments
Instruments
Year Ended December 31,
Year Ended December 31,
Type of Derivative
2024
2023
2024
2023
Specialty Products and Solutions segment:
Inventory financing obligation
$
(61.3)
$
—
$
58.7
$
(14.5)
Crack spread swaps
13.5
(21.8)
(11.6)
42.9
Montana/Renewables segment:
Inventory financing obligation
10.0
(1.3)
—
4.6
Total
$
(37.8)
$
(23.1)
$
47.1
$
33.0
Derivative Positions
At December 31, 2024, the Company had no outstanding derivative contracts.
10. Fair Value Measurements
The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
Observable inputs are from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions
about the factors market participants would use in valuing the asset or liability developed based upon the best information
available in the circumstances. These tiers include the following:
●
Level 1 — inputs include observable unadjusted quoted prices in active markets for identical assets or liabilities
●
Level 2 — inputs include other than quoted prices in active markets that are either directly or indirectly
observable
●
Level 3 — inputs include unobservable inputs in which little or no market data exists, therefore requiring an
entity to develop its own assumptions
In determining fair value, the Company uses various valuation techniques and prioritizes the use of observable inputs.
The availability of observable inputs varies from instrument to instrument and depends on a variety of factors including the
type of instrument, whether the instrument is actively traded and other characteristics particular to the instrument. For
many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely
accepted by market participants and the valuation does not require significant management judgment. For other financial
instruments, pricing inputs are less observable in the marketplace and may require management judgment.
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111
Recurring Fair Value Measurements
Derivative Assets and Liabilities
Derivative instruments are reported in the accompanying consolidated financial statements at fair value. The
Company’s derivative instruments consist of over-the-counter (“OTC”) contracts, which are not traded on a public
exchange. Substantially all of the Company’s derivative instruments are with counterparties that have long-term credit
ratings of at least A3 and BBB+ by Moody’s and S&P, respectively.
To estimate the fair values of the Company’s commodity derivative instruments, the Company uses the forward rate,
the strike price, contractual notional amounts, the risk free rate of return and contract maturity. Various analytical tests are
performed to validate the counterparty data. The fair values of the Company’s derivative instruments are adjusted for
nonperformance risk and creditworthiness of the hedging entities through the Company’s credit valuation adjustment
(“CVA”). The CVA is calculated at the counterparty level utilizing the fair value exposure at each payment date and
applying a weighted probability of the appropriate survival and marginal default percentages. The Company uses the
counterparty’s marginal default rate and the Company’s survival rate when the Company is in a net asset position at the
payment date and uses the Company’s marginal default rate and the counterparty’s survival rate when the Company is in a
net liability position at the payment date.
Observable inputs utilized to estimate the fair values of the Company’s derivative instruments were based primarily on
inputs that are readily available in public markets or can be derived from information available in publicly quoted markets.
Based on the use of various unobservable inputs, principally non-performance risk, creditworthiness of the hedging entities
and unobservable inputs in the forward rate, the Company has categorized these derivative instruments as Level 3.
Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly lower
(higher) fair value measurement. The Company believes it has obtained the most accurate information available for the
types of derivative instruments it holds. Please read Note 9 — “Derivatives” for further information on derivative
instruments.
Pension Assets
Pension assets are reported at fair value in the accompanying consolidated financial statements. At December 31, 2024
and 2023, the Company’s investments associated with its Pension Plan (as such term is hereinafter defined) consisted of
(i) cash and cash equivalents, (ii) fixed income bond funds, (iii) mutual equity funds, and (iv) mutual balanced funds. The
fixed income bond funds, mutual equity funds, and mutual balanced funds that are measured at fair value using a market
approach based on quoted prices from national securities exchanges are categorized in Level 1 of the fair value hierarchy.
The fixed income bond funds, mutual equity funds, and mutual balanced funds that are measured at fair value using a
market approach based on prices obtained from an independent pricing service are categorized in Level 2 of the fair value
hierarchy.
Liability Awards
Stock-based compensation Liability Awards are awards that are currently expected to be settled in cash on their vesting
dates, rather than in common shares. The Liability Awards are categorized as Level 1 because the fair value of the Liability
Awards is based on the Company’s quoted closing price per common share as of each balance sheet date.
Precious Metals Obligations
The fair value of precious metals obligations is based upon unadjusted exchange-quoted prices and is, therefore,
classified within Level 1 of the fair value hierarchy.
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112
Hierarchy of Recurring Fair Value Measurements
The Company’s recurring assets and liabilities measured at fair value were as follows (in millions):
December 31, 2024
December 31, 2023
Level 1 Level 2 Level 3
Total
Level 1 Level 2 Level 3
Total
Assets:
Derivative assets:
Crack spread swaps
$
—
$
—
$ —
$
—
$
—
$
—
$ 11.6
$
11.6
Inventory financing obligation
—
—
5.7
5.7
—
—
—
—
Total derivative assets
$
—
$
—
$ 5.7
$
5.7
$
—
$
—
$ 11.6
$
11.6
Pension plan investments
$
3.7
$ 22.2
$ —
$ 25.9
$
3.5
$ 23.5
$
—
$
27.0
Total recurring assets at fair value
$
3.7
$ 22.2
$ 5.7
$ 31.6
$
3.5
$ 23.5
$ 11.6
$
38.6
Liabilities:
Derivative liabilities:
Inventory financing obligation
$
—
$
—
$ —
$
—
$
—
$
—
$ (52.5)
$
(52.5)
Total derivative liabilities
$
—
$
—
$ —
$
—
$
—
$
—
$ (52.5)
$
(52.5)
Precious metals obligations
(5.2)
—
—
(5.2)
(6.9)
—
—
(6.9)
Liability awards
(67.8)
—
—
(67.8)
(64.2)
—
—
(64.2)
Total recurring liabilities at fair value
$ (73.0)
$
—
$ —
$ (73.0)
$ (71.1)
$
—
$ (52.5)
$ (123.6)
The table below sets forth a summary of net changes in fair value of the Company’s Level 3 financial assets and
liabilities (in millions):
For the Year Ended December 31,
2024
2023
Fair value at January 1,
$
(40.8)
$
(73.8)
Realized loss on derivative instruments
(37.8)
(23.1)
Unrealized gain on derivative instruments
47.1
33.0
Settlements
37.8
23.1
Fair value at December 31,
$
6.3
$
(40.8)
Total gain (loss) included in net income (loss) attributable to changes in unrealized gain
(loss) relating to financial assets and liabilities held as of December 31,
$
47.1
$
33.0
Nonrecurring Fair Value Measurements
Certain non-financial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair
value adjustments in certain circumstances, such as when there is evidence of impairment.
The Company assesses goodwill for impairment annually and whenever events or changes in circumstances indicate
its carrying value may not be recoverable. The fair value of the reporting units is determined using the income approach.
The income approach focuses on the income-producing capability of an asset, measuring the current value of the asset by
calculating the present value of its future economic benefits such as cash earnings, cost savings, corporate tax structure and
product offerings. Value indications are developed by discounting expected cash flows to their present value at a rate of
return that incorporates the risk-free rate for the use of funds, the expected rate of inflation and risks associated with the
reporting unit. These assets would generally be classified within Level 3, in the event that the Company were required to
measure and record such assets at fair value within its consolidated financial statements. Please read Note 5 — “Goodwill
and Other Intangible Assets” for further information on goodwill impairment.
The Company periodically evaluates the carrying value of long-lived assets to be held and used, including finite-lived
intangible assets and property plant and equipment, when events or circumstances warrant such a review. Fair value is
determined primarily using anticipated cash flows assumed by a market participant discounted at a rate commensurate with
the risk involved and these assets would generally be classified within Level 3, in the event that the Company was
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113
required to measure and record such assets at fair value within its consolidated financial statements. Please read Note 2 —
“Summary of Significant Accounting Policies” for further information on long-lived asset impairment.
The 2.0 million warrants to purchase common stock at an exercise price of $20.00 per share (subject to adjustment)
issued to the Sponsor Parties pursuant to the Conversion Agreement were recorded at their fair value on July 10, 2024. The
fair value of the warrants was determined using the Black-Scholes option pricing model based on assumptions that would
generally be classified within Level 3 to record such warrants within Stockholders’ Equity in the consolidated balance
sheets.
Estimated Fair Value of Financial Instruments
Cash, cash equivalents and restricted cash
The carrying value of cash, cash equivalents and restricted cash are each considered to be representative of their fair
value.
Debt
The estimated fair value of long-term debt at December 31, 2024 and 2023, consists primarily of senior notes. The
estimated aggregate fair value of the Company’s 2024 Secured Notes and 2025, 2026, 2027, and 2028 Senior Notes, and
2029 Secured Notes defined as Level 2 was based upon quoted prices for identical or similar liabilities in markets that are
not active. The carrying value of borrowings, if any, under the Company’s revolving credit facility, MRL Revolving Credit
Agreement, MRL asset financing arrangements, MRL term loan credit agreement, Montana refinery asset financing
arrangement, finance lease obligations and other obligations are classified as Level 3. Please read Note 8 — “Long-Term
Debt” for further information on long-term debt.
The Company’s carrying value and estimated fair value of the Company’s financial instruments, carried at adjusted
historical cost, were as follows (in millions):
December 31, 2024
December 31, 2023
Level
Fair Value
Carrying Value
Fair Value
Carrying Value
Financial Instrument:
2024 Secured Notes, 2025 Notes, 2026 Notes, 2027 Notes,
2028 Notes, and 2029 Secured Notes
2
$ 1,218.3 $
1,196.7
$ 1,247.2 $
1,232.3
Revolving credit facility
3
$
286.6 $
283.6
$
136.7 $
134.4
MRL revolving credit agreement
3
$
— $
(0.3)
$
13.0 $
12.4
MRL term loan credit agreement
3
$
73.7 $
71.4
$
74.4 $
71.6
Shreveport terminal asset financing arrangement
3
$
42.1 $
41.6
$
50.8 $
50.1
Montana terminal asset financing arrangement
3
$
30.4 $
30.2
$
— $
—
Montana refinery asset financing arrangement
3
$
108.7 $
108.7
$
— $
—
MRL asset financing arrangements
3
$
368.1 $
365.4
$
384.6 $
381.6
Finance leases and other obligations
3
$
2.9 $
2.9
$
3.0 $
3.0
11. Stockholders’ Equity
Common Stock Authorized and Outstanding
As of December 31, 2024, the Company has 700,000,000 shares of common stock authorized for issuance and
85,950,493 shares of common stock issued and outstanding.
Preferred Stock Authorized and Outstanding
As of December 31, 2024, the Company has 100,000,000 shares of preferred stock authorized for issuance and no
shares of preferred stock issued and outstanding.
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114
Outstanding Warrants
As of December 31, 2024, there were outstanding warrants to purchase an aggregate of 2,000,000 shares of common
stock at an exercise price of $20.00 per share (subject to adjustment). The outstanding warrants are exercisable through
July 10, 2027.
12. Stock-Based Compensation
The Calumet, Inc. Long-Term Incentive Plan (the “Plan” or “LTIP”) was adopted by the Company on July 10, 2024,
simultaneously with the closing of the transactions contemplated by the Conversion Agreement. The Plan was originally
adopted by Calumet GP, LLC on January 24, 2006 and was subsequently amended and restated on December 10, 2015,
December 9, 2021 and February 9, 2024, in each case, subject to approval by unitholders of Calumet Specialty Products
Partners, L.P. The Plan is intended to promote the interests of the Company and its Affiliates by providing to employees,
consultants and directors incentive compensation awards based on shares to encourage superior performance and align the
interests of such individuals with the Company’s shareholders. The Plan is also contemplated to enhance the ability of the
Company and its Affiliates to attract and retain the services of individuals who are essential for the growth and profitability
of the Company and its Affiliates and to encourage them to devote their best efforts to advancing the business of the
Company and its Affiliates. The LTIP provides for the grant of an option, other cash-based awards, other stock-based
awards, restricted stock units, restricted stock awards, and substitute awards. Following shareholder approval of the
February 9, 2024 amendment to the LTIP, an aggregate of 8,483,960 common shares may be delivered pursuant to awards
under the LTIP. Shares delivered or withheld from any award under the LTIP in satisfaction of the tax withholding
obligations associated with such award are available for delivery pursuant to other awards. The LTIP is administered by the
compensation committee of the Company’s board of directors.
Liability Awards are awards that are currently expected to be settled in cash on their vesting dates, rather than in
common shares. Liability Awards are recorded in accrued salaries, wages and benefits in the consolidated balance sheets
based on the vested portion of the fair value of the awards on the balance sheet date. The fair value of Liability Awards is
updated at each balance sheet date and changes in the fair values of the vested portions of the awards are recorded as
increases or decreases to compensation expense within general and administrative expense in the consolidated statements
of operations.
Restricted Stock Units
Non-employee directors and certain management level employees of the Company have been granted restricted stock
units under the terms of the LTIP as part of their respective compensation packages related to fiscal years 2024 and 2023.
The restricted stock units granted to non-employee directors and employees related to fiscal years 2024 and 2023 vest in
full on the third anniversary following the grant date.
Non-employee directors and certain senior management level employees of the Company are eligible to defer their
earned director fees or earned annual cash incentive amounts, respectively, into the Deferred Compensation Plan. When
such individuals elect to defer any portion of their compensation into the plans, these deferred amounts are credited to the
participant in the form of restricted stock units. The compensation committee may recommend a matching contribution for
the deferred amounts at its discretion.
For stock-based compensation equity awards, the Company uses the market price of its common shares on the grant
date to calculate the fair value and related compensation cost of the restricted stock units. The Company amortizes this
compensation cost to stockholders’ equity and general and administrative expense in the consolidated statements of
operations using the straight-line method over the service period, as it expects these restricted stock units to fully vest.
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115
A summary of the Company’s non-vested restricted stock units as of December 31, 2024, and the changes during
the years ended December 31, 2024 and 2023, are presented below:
Weighted-
Number of
Average
Restricted Stock Units
Grant Date Fair Value
Non-vested at January 1, 2022
2,128,561
$
2.31
Granted
931,926
15.02
Vested
(1,706,783)
5.61
Forfeited
(39,322)
6.62
Non-vested at December 31, 2022
1,314,382
$
6.58
Granted
1,216,817
17.53
Vested
(1,144,542)
11.08
Forfeited
(159,080)
11.89
Non-vested at December 31, 2023
1,227,577
$
9.83
Granted
233,632
17.22
Vested
(205,074)
12.52
Forfeited
(45,824)
16.74
Non-vested at December 31, 2024
1,210,311
$
16.57
For the year ended December 31, 2024, compensation expense of $19.7 million was recognized in the consolidated
statements of operations related to restricted stock unit grants. For the year ended December 31, 2023, compensation
expense of $21.8 million was recognized in the consolidated statements of operations related to restricted stock unit grants.
As of December 31, 2024, there was a total of $11.6 million of unrecognized compensation costs related to non-vested
restricted stock unit grants, all of which was attributable to Liability Awards. These costs are expected to be recognized
over a weighted-average period of approximately two years. The total fair value of restricted stock units vested during
the years ended December 31, 2024 and 2023, was $3.4 million and $19.8 million, respectively.
13. Employee Benefit Plans
Defined Contribution Plan
The Company has a domestic defined contribution plan administered by the Company’s benefits committee, with the
oversight of the board of directors, for (i) all full-time employees that are eligible to participate in the plan (the
“401(k) Plan”). Participants in the 401(k) Plan are allowed to contribute 1% to 70% of their pre-tax earnings to the plan,
subject to government imposed limitations. The Company matches 100% of each 1% of eligible compensation contributed
by the participant up to 4% and 50% of each additional 1% of eligible compensation contributed up to 6%, for a maximum
contribution by the Company of 5% of eligible compensation contributed per participant. The 401(k) Plan also includes a
profit-sharing component for eligible employees. Contributions under the profit-sharing component are determined by the
Company’s board of directors and are discretionary. The funding policy is consistent with funding requirements of
applicable laws and regulations.
The Company recorded the following 401(k) Plan matching contribution expense in the consolidated statements of
operations (in millions):
Year Ended December 31,
2024
2023
2022
401(k) Plan matching contribution expense
$
7.5
$
7.0
$
6.9
Defined Benefit Pension Plan
The Company has domestic noncontributory defined benefit plans for those salaried employees as well as those
employees represented by either the United Steelworkers (the “USW”) or the International Union of Operating Engineers
(the “IUOE”); who (i) were formerly employees of Penreco and became employees of the Company as a result of the
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116
acquisition of Penreco on January 3, 2008 (the “Penreco Pension Plan”) or (ii) were formerly employees of Montana
Refining Company, Inc. and who became employees of the Company as a result of the acquisition of the Great Falls
refinery on October 1, 2012 (the “Great Falls Pension Plan” and together with the Penreco Pension Plan, the “Pension
Plan”).
Both the Penreco Pension Plan and the Great Falls Pension Plans were last amended in 2009 and 2015 respectively,
which curtailed employees covered by the plans from accumulating additional benefits in subsequent years following the
amendment date.
During 2024, the Company made an immaterial amount of contributions to its Pension Plan and expects to contribute
less than $0.1 million to its Pension Plan in 2025.
The accumulated and projected benefit obligations for the Pension Plan was $29.3 million and $31.2 million as of
December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, the discount rate used to
determine the benefit obligations was 5.54% and 4.97%, respectively, for the Penreco Pension Plan and 5.67% and 5.05%,
respectively, for the Great Falls Pension Plan. For the years ended December 31, 2024 and 2023, the expected rate of return
on plan assets was 6.70% and 5.25%, respectively, for the Penreco Pension Plan and 6.00% and 6.00%, respectively, for the
Great Falls Pension Plan. The fair value of plan assets was $25.9 million and $27.0 million as of December 31, 2024 and
2023, respectively. The estimated benefit payments for the Pension Plan, which reflect expected future service, as
appropriate, are expected to be less than $2.6 million in each of the next five years.
14. Accumulated Other Comprehensive Loss
The table below sets forth a summary of changes in accumulated other comprehensive loss by component for the years
ended December 31, 2024 and 2023 (in millions):
Defined Benefit
Pension And
Retiree Health
Benefit Plans
Total
Accumulated other comprehensive loss at December 31, 2022
$
(8.3)
$
(8.3)
Other comprehensive income before reclassifications
1.1
1.1
Net current period other comprehensive income
1.1
1.1
Accumulated other comprehensive loss at December 31, 2023
$
(7.2)
$
(7.2)
Other comprehensive income before reclassifications
0.2
0.2
Net current period other comprehensive income
0.2
0.2
Accumulated other comprehensive loss at December 31, 2024
$
(7.0)
$
(7.0)
15. Income Taxes
The components of net income (loss) before income tax expense (benefit) were as follows (in millions):
December 31,
2024
2023
2022
Domestic
$
(225.1)
$
45.4
$
(177.6)
Foreign
3.9
4.3
7.7
Total
$
(221.2)
$
49.7
$
(169.9)
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117
The components of the income tax expense (benefit) were as follows (in millions):
December 31,
Current expense (benefit)
2024
2023
2022
Federal
$
0.7
$
—
$
—
State
(0.7)
0.2
0.4
Foreign
1.2
1.5
2.5
Total
$
1.2
$
1.7
$
2.9
Deferred expense (benefit)
Federal
$
—
$
—
$
—
State
(0.4)
(0.1)
0.5
Foreign
—
—
—
Total
$
(0.4)
$
(0.1)
$
0.5
Total income tax expense (benefit)
$
0.8
$
1.6
$
3.4
The reconciliation between the effective tax rate to the U.S. statutory tax rate is as follows:
December 31,
2024
2023
2022
Federal income tax rate
21.0 %
21.0 %
21.0 %
State income taxes, net of federal income tax effect
3.6
0.2
(0.5)
Partnership earnings not subject to tax
(8.3)
(20.0)
(21.4)
Foreign taxes effect
0.5
2.8
(1.4)
Other nontaxable income
4.9
—
—
Other
0.5
—
—
Change in valuation allowance
(22.6)
(0.8)
0.4
Effective tax rate
(0.4)%
3.2 %
(1.9)%
On July 10, 2024, Calumet, Inc. completed the Conversion pursuant to which it became the parent holding company of
Calumet Specialty Products Partners, L.P. and its subsidiaries. Following the Conversion, the Company’s sole material
asset is its interest in the Partnership, which for U.S. federal, state and local income tax purposes its net taxable income and
related tax credits, if any, are passed through to its partners and included in the partner’s tax returns. The Partnership is also
subject to and reports entity level taxes in certain states. The income tax burden on the earnings taxed to the unitholders
other than Calumet, Inc. is not reported by the Company in its consolidated financial statements under U.S. GAAP. As a
result, the Company’s effective tax rate differs materially from the statutory rate.
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118
Significant components of the Company’s deferred tax assets and liabilities are as follows (in millions):
December 31,
2024
2023
Deferred tax assets:
Investment in partnership
$
190.4
$
—
Net operating loss carryforwards
39.0
0.8
Interest expense limitation carryforwards
20.0
—
Other
3.2
0.8
Total deferred tax assets
$
252.6
$
1.6
Less: valuation allowance
(252.6)
(1.6)
Total deferred tax assets, net of valuation allowance
$
—
$
—
Deferred tax liabilities
Other
$
—
$
(0.4)
Total deferred tax liabilities
$
—
$
(0.4)
Net deferred tax asset (liability)
$
—
$
(0.4)
Due to the weight of objectively verifiable negative evidence, including its history of losses, the Company’s deferred
tax assets have been fully offset by a valuation allowance.
As of December 31, 2024, the Company has federal and state net operating loss carryforwards of approximately
$146.6 million and $122.6 million, respectively. Federal net operating losses carry forward indefinitely. Of the $122.6
million of state net operating loss carryforwards, $55.3 million carry forward indefinitely. The remaining state net
operating loss carryforwards begin to expire in 2034.
As a result of the Company’s analysis, management has determined that the Company does not have any uncertain tax
positions. The Company believes the income tax filing positions, including previous status as a pass-through entity, would
be sustained on audit and do not anticipate any adjustments that would result in a material change to the consolidated
balance sheet. As of December 31, 2024 and 2023, no material unrecognized tax benefits were recognized as liabilities in
the consolidated balance sheet.
The Company is subject to taxation in the United States and various state and foreign jurisdictions. The only material
jurisdiction in which the Company operates is the United States. The Company’s federal and state tax returns remain
subject to examination by taxing authorities for three years.
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119
16. Earnings per Share/Unit
The following table sets forth the computation of basic and diluted earnings per share / limited partner unit (in
millions, except share/unit and per share/unit data):
Year Ended December 31,
2024
2023
2022
Numerator for basic and diluted earnings per share / limited
partner unit:
Net income (loss)
$
(222.0)
$
48.1
$
(173.3)
Less:
General partner's interest in net income (loss)
1.0
(3.5)
Net income (loss) attributable to limited partners
$
47.1
$
(169.8)
Denominator for earnings per share / limited partner unit:
Weighted average number of basic and diluted common
shares / limited partner units outstanding (1) (2)
83,146,680
80,075,530
79,336,283
Earnings per share / limited partners' interest net income
(loss) per unit:
Basic and diluted
$
(2.67)
$
0.59
$
(2.14)
(1)
There were no incremental shares that would have been dilutive in the computation of earnings per limited partner unit
for the year ended December 31, 2023.
(2)
Total diluted weighted average common shares / limited partner units outstanding excludes a de-minimis amount of
potentially dilutive restricted stock units / phantom units which would have been anti-dilutive for the years ended
December 31, 2024 and 2022.
17. Transactions with Related Parties
During the years ended December 31, 2024, 2023, and 2022, the Company had product sales to related parties of $7.5
million, $8.4 million, and $16.5 million, respectively. Trade accounts and other receivables from related parties at
December 31, 2024 and 2023 were $1.3 million and $1.7 million, respectively. The Company also had purchases from
related parties during the years ended December 31, 2024, 2023, and 2022 of $2.8 million, $16.5 million, and $11.7
million, respectively. Accounts payable to related parties were $0.1 million and $5.9 million at December 31, 2024 and
2023, respectively.
18. Segments and Related Information
Segment Reporting
The Company determines its reportable segments based on how the business is managed internally for the products
sold to customers, including how results are reviewed and resources are allocated. This is consistent with how our chief
operating decision maker (“CODM”), who is our Chief Executive Officer, allocates resources and makes decisions. The
Company’s operations are managed by the CODM using the following reportable segments:
●
Specialty Products and Solutions. The Specialty Products and Solutions segment consists of our customer-
focused solutions and formulations businesses, covering multiple specialty product lines, anchored by our unique
integrated complex in Northwest Louisiana. In this 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.
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120
●
Montana/Renewables. The Montana/Renewables segment is composed of our Great Falls specialty asphalt
facility and our Montana Renewables facility. At our Montana Renewables 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 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.
●
Performance Brands. The Performance Brands segment includes our fast-growing portfolio of high-quality, high-
performing brands. In this segment, we blend, package, and market high performance products through our Royal
Purple, Bel-Ray, and TruFuel brands.
●
Corporate. The Corporate segment primarily consists of general and administrative expenses not allocated to the
Montana/Renewables, Specialty Products and Solutions, or Performance Brands segments.
The accounting policies of the reporting segments are the same as those described in the summary of significant
accounting policies as disclosed in Note 2 — “Summary of Significant Accounting Policies,” except that the disaggregated
financial results for the reporting segments have been prepared using a management approach, which is consistent with the
basis and manner in which management internally disaggregates financial information for the purposes of assisting internal
operating decisions. The Company accounts for inter-segment sales and transfers using market-based transfer pricing. The
Company will periodically refine its expense allocation methodology for its segment reporting as more specific
information becomes available and the industry or market changes. The CODM uses Adjusted EBITDA (a non-GAAP
financial measure) to evaluate performance and allocate resources to each segment, primarily through periodic budgeting
and segment performance reviews. The Company defines Adjusted EBITDA for any period as EBITDA adjusted for
(a) impairment; (b) unrealized gains and losses from mark-to-market accounting for hedging activities; (c) realized gains
and losses under derivative instruments excluded from the determination of net income (loss); (d) non-cash equity-based
compensation expense and other non-cash items (excluding items such as accruals of cash expenses in a future period or
amortization of a prepaid cash expense) that were deducted in computing net income (loss); (e) debt refinancing fees,
extinguishment costs, premiums and penalties; (f) any net gain or loss realized in connection with an asset sale that was
deducted in computing net income (loss); (g) amortization of turnaround costs; (h) LCM inventory adjustments; (i) the
impact of liquidation of inventory layers calculated using the LIFO method; (j) RINs mark-to-market adjustments; and
(k) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense.
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121
Reportable segment information is as follows (in millions):
Specialty
Products and
Performance
Montana/
Consolidated
Year Ended December 31, 2024
Solutions (1)
Brands (2)
Renewables (3)
Corporate
Eliminations
Total
Sales:
External customers
$ 2,789.3
$
335.2
$
1,064.9
$
—
$
—
$
4,189.4
Inter-segment sales
23.3
0.4
—
—
(23.7)
—
Total sales
$ 2,812.6
$
335.6
$
1,064.9
$
—
$
(23.7)
$
4,189.4
Cost of sales
$ 2,600.3
$
239.9
$
1,118.4
$
—
$
—
$
3,958.6
Gross profit (loss)
$
189.0
$
95.3
$
(53.5)
$
-
$
—
$
230.8
Adjusted EBITDA
$
193.6
$
57.4
$
16.7
$ (72.9)
$
—
$
194.8
Reconciling items to net loss:
Depreciation and amortization
70.6
8.7
106.8
0.9
—
187.0
LCM / LIFO loss
0.2
0.6
11.5
—
—
12.3
Loss on impairment and disposal of assets
0.9
—
1.1
—
—
2.0
Interest expense
22.7
0.1
70.4
143.5
—
236.7
Debt extinguishment costs
0.1
—
—
0.3
—
0.4
Unrealized gain on derivatives
(47.1)
—
—
—
—
(47.1)
RINs mark-to-market gain
(45.0)
—
(21.4)
—
—
(66.4)
Other non-recurring expenses
75.5
Equity-based compensation and other
items
19.7
Income tax expense
0.8
Noncontrolling interest adjustments
(4.1)
Net loss
$
(222.0)
Capital expenditures
$
49.5
$
0.7
$
43.3
$
3.8
$
—
$
97.3
PP&E, net
$
351.6
$
31.4
$
1,051.0
$
4.8
$
—
$
1,438.8
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122
Specialty
Products and
Performance
Montana/
Consolidated
Year Ended December 31, 2023
Solutions (1)
Brands (2)
Renewables (4)
Corporate
Eliminations
Total
Sales:
External customers
$
2,876.9
$
310.3
$
993.8
$
—
$
—
$
4,181.0
Inter-segment sales
17.2
0.3
—
—
(17.5)
—
Total sales
$
2,894.1
$
310.6
$
993.8
$
—
$
(17.5)
$
4,181.0
Cost of sales
$
2,474.7
$
228.2
$
1,026.4
$
—
$
—
$
3,729.3
Gross profit (loss)
$
402.2
$
82.1
$
(32.6)
$
-
$
—
$
451.7
Adjusted EBITDA
$
251.2
$
47.9
$
30.2
$ (68.8)
$
—
$
260.5
Reconciling items to net income:
Depreciation and amortization
76.8
9.9
95.2
1.1
—
183.0
LCM / LIFO (gain) loss
(2.1)
2.0
35.7
—
—
35.6
Loss on impairment and disposal of
assets
—
—
3.5
—
—
3.5
Interest expense
27.9
0.1
65.4
128.3
—
221.7
Debt extinguishment costs
—
—
0.4
5.5
—
5.9
Unrealized (gain) loss on derivatives
(28.4)
—
(4.6)
—
—
(33.0)
RINs mark-to-market gain
(201.1)
—
(89.1)
—
—
(290.2)
Other non-recurring expenses
60.9
Equity-based compensation and other
items
20.2
Income tax expense
1.6
Noncontrolling interest adjustments
3.2
Net income
$
48.1
Capital expenditures
$
82.2
$
2.3
$
234.6
$
0.6
$
—
$
319.7
PP&E, net
$
373.0
$
33.4
$
1,097.9
$
2.0
$
—
$
1,506.3
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123
Specialty
Products and
Performance
Montana/
Consolidated
Year Ended December 31, 2022
Solutions (5) (6)
Brands
Renewables (4)
Corporate
Eliminations
Total
Sales:
External customers
$
3,508.0
$
303.4
$
874.9
$
—
$
—
$
4,686.3
Inter-segment sales
24.7
—
—
—
(24.7)
—
Total sales
$
3,532.7
$
303.4
$
874.9
$
—
$
(24.7)
$
4,686.3
Cost of sales
$
3,182.5
$
247.8
$
904.3
$
—
$
—
$
4,334.6
Gross profit (loss)
$
325.5
$
55.6
$
(29.4)
$
-
$
—
$
351.7
Adjusted EBITDA
$
379.4
$
20.2
$
75.8
$ (85.4)
$
—
$
390.0
Reconciling items to net loss:
Depreciation and amortization
63.0
11.3
41.1
6.0
—
121.4
LCM / LIFO (gain) loss
(14.2)
(0.3)
21.1
—
—
6.6
Loss on impairment and disposal of
assets
—
—
0.7
—
—
0.7
Interest expense
32.3
1.2
29.8
112.6
—
175.9
Debt extinguishment costs
—
—
38.3
3.1
—
41.4
Unrealized (gain) loss on derivatives
51.9
—
(6.0)
—
—
45.9
RINs mark-to-market loss
75.0
—
40.7
—
—
115.7
Other non-recurring expenses
15.6
Equity-based compensation and other
items
34.4
Income tax expense
3.4
Noncontrolling interest adjustments
2.3
Net loss
$
(173.3)
Capital expenditures
$
68.4
$
2.0
$
528.1
$
0.3
$
—
$
598.8
PP&E, net
$
382.4
$
34.1
$
1,062.7
$
2.8
$
—
$
1,482.0
(1)
For the years ended December 31, 2024 and 2023, Adjusted EBITDA for the Specialty Products and Solutions
segment included a $6.2 million and $9.5 million gain recorded in cost of sales in the consolidated statements of
operations, respectively, for proceeds received under the Company’s property damage insurance policy.
(2)
For the years ended December 31, 2024 and 2023, Adjusted EBITDA for the Performance Brands segment included a
$5.8 million and $8.2 million gain recorded in cost of sales in the consolidated statements of operations, respectively,
for proceeds received under the Company’s business interruption insurance policy.
(3)
For the year ended December 31, 2024, Adjusted EBITDA for the Montana/Renewables segment included a $19.6
million gain recorded in cost of sales in the consolidated statements of operations for proceeds received under the
Company’s property damage insurance policy.
(4)
For the year ended December 31, 2023, Adjusted EBITDA for the Montana/Renewables segment excluded a $50.6
million charge to cost of sales in the consolidated statements of operations for losses under firm purchase
commitments. For the year ended December 31, 2022, Adjusted EBITDA for the Montana/Renewables segment
excluded a $13.0 million charge to cost of sales in the consolidated statements of operations for losses under firm
purchase commitments.
(5)
For the year ended December 31, 2022, Adjusted EBITDA for the Specialty Products and Solutions segment included
a $13.9 million gain recorded in cost of sales in the consolidated statements of operations for proceeds received under
the Company’s business interruption insurance policy. The Company incurred business losses due to increased costs
arising from a polar vortex that occurred in 2021 in northwest Louisiana. As a result, the Company filed a contingent
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124
business interruption claim. Specifically, the losses included a loss of throughput at the Shreveport refinery and
additional transportation related expenses.
(6)
For the year ended December 31, 2022, Adjusted EBITDA for the Specialty Products and Solutions segment included
a $4.4 million gain recorded in cost of sales in the consolidated statements of operations for proceeds received under
the Company’s property damage insurance policy as a result of damages caused by a polar vortex that occurred in
2021.
Geographic Information
International sales accounted for less than ten percent of consolidated sales in each of the years ended
December 31, 2024, 2023, and 2022, respectively.
Product Information
The Company offers specialty, fuels, renewable fuels and packaged products primarily in categories consisting of
lubricating oils, solvents, waxes, gasoline, diesel, jet fuel, asphalt, heavy fuel oils, renewable fuels, high-performance
branded specialty products, and other specialty and fuels products. The following table sets forth the major product
category sales for each segment (dollars in millions):
Year Ended December 31,
2024
2023
2022
Specialty Products and Solutions:
Lubricating oils
$
788.6
18.8 % $
763.8
18.3 % $
913.7
19.5 %
Solvents
407.3
9.7 %
398.5
9.5 %
434.9
9.3 %
Waxes
156.3
3.7 %
163.9
3.9 %
189.3
4.0 %
Fuels, asphalt and other by-products
1,437.1
34.4 % 1,550.7
37.1 % 1,970.1
42.0 %
Total
$ 2,789.3
66.6 % $ 2,876.9
68.8 % $ 3,508.0
74.8 %
Montana/Renewables:
Gasoline
$
140.8
3.4 % $
167.2
4.0 % $
188.1
4.0 %
Diesel
114.6
2.7 %
144.8
3.5 %
391.8
8.4 %
Jet fuel
18.2
0.4 %
20.5
0.5 %
41.8
0.9 %
Asphalt, heavy fuel oils and other
159.6
3.8 %
148.1
3.5 %
253.2
5.4 %
Renewable fuels
631.7
15.1 %
513.2
12.3 %
—
— %
Total
$ 1,064.9
25.4 % $
993.8
23.8 % $
874.9
18.7 %
Performance Brands:
$
335.2
8.0 % $
310.3
7.4 % $
303.4
6.5 %
Consolidated sales
$ 4,189.4
100.0 % $ 4,181.0
100.0 % $ 4,686.3
100.0 %
Major Customers
During the years ended December 31, 2024, 2023, and 2022 the Company had no customer that represented 10% or
greater of consolidated sales.
Major Suppliers
During the year ended December 31, 2024, the Company had three counterparties that supplied approximately 83.6%
of its crude oil supply. During the years ended December 31, 2023 and 2022, the Company had two counterparties that
supplied approximately 90.2%, and 86.2%, respectively, of its crude oil supply.
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125
19. Unrestricted Subsidiaries
As defined in the indentures governing the Company’s outstanding senior notes, an unrestricted subsidiary means
Montana Renewables Holdings, MRL and any other subsidiary of the Company, other than Calumet Finance Corp., that is
designated by the Company’s board of directors as an unrestricted subsidiary, but only to the extent that such subsidiary:
●
has no indebtedness other than non-recourse debt owing to any person other than the Company or any of its
restricted subsidiaries, except to the extent permitted by the indentures of the senior notes;
●
is not party to any agreement, contract, arrangement or understanding with the Company or any restricted
subsidiary of the Company unless the terms of any such agreement, contract, arrangement or other understanding
are no less favorable to the Company or such restricted subsidiary than those that might be obtained at the time
from persons who are not affiliates of the Company, except to the extent permitted by the indentures of the senior
notes;
●
is a person with respect to which neither the Company nor any of its restricted subsidiaries has any direct or
indirect obligation (a) to subscribe for additional equity interests or (b) to maintain or preserve such person’s
financial condition or to cause such person to achieve any specified levels of operating results, except to the
extent permitted by the indentures of the senior notes; and
●
has not guaranteed or otherwise directly or indirectly provided credit support for any indebtedness of the
Company or any of its restricted subsidiaries.
For the years ended December 31, 2024 and December 31, 2023, respectively, Montana Renewables Holdings and
MRL were the only unrestricted subsidiaries of the Company. In accordance with the indentures governing the Company’s
outstanding senior notes, the following table sets forth certain financial information of (i) the Company and its restricted
subsidiaries, on a combined basis, (ii) the Company’s unrestricted subsidiaries, on a combined basis, and (iii) the Company
and its subsidiaries, on a consolidated basis, in each case, as of December 31, 2024 and December 31, 2023, respectively.
Parent
Company and
Restricted
Unrestricted
Consolidated
December 31, 2024
Subsidiaries
Subsidiaries
Eliminations
Total
Cash and cash equivalents
$
8.9
$
29.2
$
—
$
38.1
Accounts receivable - trade
$
219.2
$
22.5
$
—
$
241.7
Accounts receivable - other
$
24.5
$
11.9
$
—
$
36.4
Inventory
$
379.9
$
36.4
$
—
$
416.3
Prepaid expenses and other current assets
$
20.5
$
13.0
$
—
$
33.5
Property, plant and equipment, net
$
688.5
$
750.3
$
—
$
1,438.8
Operating lease right-of-use assets
$
236.6
$
3.6
$
—
$
240.2
Other noncurrent assets, net
$
107.8
$
10.4
$
—
$
118.2
Accounts payable
$
279.5
$
484.3
$
(443.0)
$
320.8
Accrued interest payable
$
44.4
$
1.0
$
—
$
45.4
Other taxes payable
$
10.0
$
1.9
$
—
$
11.9
Obligations under inventory financing agreements
$
—
$
32.0
$
—
$
32.0
Current portion of operating lease liabilities
$
56.0
$
2.8
$
—
$
58.8
Current portion of long-term debt
$
16.4
$
19.1
$
—
$
35.5
Long-term operating lease liabilities
$
181.4
$
0.8
$
—
$
182.2
Long-term debt, less current portion
$
1,646.7
$
516.0
$
(98.0)
$
2,064.7
Redeemable noncontrolling interest
$
—
$
245.6
$
—
$
245.6
Stockholders' equity
$
(241.2)
$
(426.2)
$
(44.5)
$
(711.9)
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126
Parent
Company and
Restricted
Unrestricted
Consolidated
December 31, 2023
Subsidiaries
Subsidiaries
Eliminations
Total
Cash and cash equivalents
$
7.3
$
0.6
$
—
$
7.9
Accounts receivable - trade
$
230.7
$
21.7
$
—
$
252.4
Accounts receivable - other
$
24.8
$
9.0
$
—
$
33.8
Inventory
$
353.1
$
86.3
$
—
$
439.4
Prepaid expenses and other current assets
$
14.6
$
37.0
$
—
$
51.6
Property, plant and equipment, net
$
731.7
$
774.6
$
—
$
1,506.3
Operating lease right-of-use assets
$
108.1
$
6.3
$
—
$
114.4
Other noncurrent assets, net
$
127.3
$
7.1
$
—
$
134.4
Accounts payable
$
282.4
$
333.3
$
(293.7)
$
322.0
Accrued interest payable
$
47.8
$
0.9
$
—
$
48.7
Other taxes payable
$
11.9
$
1.6
$
—
$
13.5
Obligations under inventory financing agreements
$
126.0
$
64.4
$
—
$
190.4
Other current liabilities
$
20.4
$
22.0
$
—
$
42.4
Current portion of operating lease liabilities
$
72.2
$
3.4
$
—
$
75.6
Current portion of long-term debt
$
38.8
$
16.9
$
—
$
55.7
Long-term operating lease liabilities
$
36.0
$
3.0
$
—
$
39.0
Long-term debt
$
1,381.0
$
548.7
$
(100.0)
$
1,829.7
Redeemable noncontrolling interest
$
—
$
245.6
$
—
$
245.6
Partners' capital (deficit)
$
(174.3)
$
(297.2)
$
(18.8)
$
(490.3)
The following table sets forth certain financial information of the Company’s unrestricted subsidiaries, on a combined
basis, as of December 31, 2024, 2023 and 2022, respectively.
Year Ended December 31,
2024
2023
2022
(In millions)
Sales
$
631.7
$
513.2
$
65.9
Cost of sales
661.1
651.0
77.8
Gross profit (loss)
(29.4)
(137.8)
(11.9)
Operating costs and expenses:
General and administrative
29.2
22.1
2.0
Taxes other than income taxes
5.9
4.3
—
Loss on impairment and disposal of assets
1.1
3.4
—
Operating loss
(65.6)
(167.6)
(13.9)
Other income (expense):
Interest expense
(99.8)
(77.8)
(32.8)
Debt extinguishment costs
—
—
(38.3)
Gain on derivative instruments
10.0
5.3
11.3
Other income
0.8
1.1
0.4
Total other expense
(89.0)
(71.4)
(59.4)
Net loss
$
(154.6)
$
(239.0)
$
(73.3)
20. Redeemable Noncontrolling Interest
On August 5, 2022 (the “Closing Date”), MRHL issued and sold 12,500,000 preferred units (“Preferred Units”) in
MRHL to an affiliate of Warburg Pincus LLC for $250.0 million for an immediate cash payment of $200.0 million and the
agreement to pay the remaining $50.0 million in cash not later than October 3, 2022 (the “Deferred Purchase Price”) in
exchange for a 14.2045% Percentage Interest in MRHL. The Company received the cash payment for the Deferred
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127
Purchase Price on October 3, 2022. The Preferred Units are not interest bearing and carry certain minimum return
thresholds.
Holders of the Preferred Units are entitled to receive a preferred return equal to the greater of (i) an internal rate of
return, or IRR, as defined in the Second Amended and Restated Limited Liability Company Agreement of MRHL (the
“Second A&R LLC Agreement”), equal to 8.0% and (ii) a multiple on invested capital, or MOIC (as defined in the Second
A&R LLC Agreement), initially equal to 1.35 and increasing by 0.01 each anniversary of the Closing Date up to a
maximum MOIC equal to 1.40 on or after the fifth anniversary of the Closing Date (the “Preferred Return”). Pursuant to
the Second A&R LLC Agreement, MRHL is required to distribute all Available Cash (as defined in the Second A&R LLC
Agreement), to the members of MRHL (the “Members”) in the following priority: (i) 37.5% to the holders of the Preferred
Units and 62.5% to all other Members pro rata based on their Percentage Interests (as defined in the Second A&R LLC
Agreement) until the holders of the Preferred Units receive the Preferred Return and (ii) thereafter, 100.0% to the Members
pro rata based on their Percentage Interests. Additionally, pursuant to the Second A&R LLC Agreement the Company is
required to make distributions to the Members sufficient to enable them to pay, on a quarterly basis, federal, state and local
taxes arising from the allocations made to such members. Further, such distributions are determined by the Company and
shall be made within thirty (30) days after the close of each applicable quarter. Any tax liability distributions shall be
treated as an advance against, and shall reduce the amount of, the next distribution that the members would otherwise
receive pursuant to the agreement.
At any time following the fifth anniversary of the Closing Date, if MRHL has not had an Initial Public Offering or
Change of Control (each as defined in the Second A&R LLC Agreement), Warburg has the right to initiate an Initial Public
Offering or Change of Control transaction pursuant to the terms of the Second A&R LLC Agreement. Upon the closing of
a Qualified Initial Public Offering (as defined in the Second A&R LLC Agreement), each of MRHL and Warburg have the
right to elect to convert all (but not less than all) of the Preferred Units (i) first by MRHL paying each holder of Preferred
Units an amount in cash equal to such holder’s Preferred Return (to the extent not already paid) and (ii) thereafter, the
Preferred Units automatically convert into the same number of common units of MRHL and will be entitled to participate
in any distributions of Available Cash to the Members in proportion to their respective Percentage Interests. The Second
A&R LLC Agreement also provides certain drag-along rights in connection with a Change of Control, subject to a
minimum preferred return requirement for certain transactions that are consummated before the third anniversary of the
Closing Date.
The redeemable noncontrolling interest in MRHL is reflected as temporary equity in the consolidated balance sheets
due to the redemption features described above and included a balance of $245.6 million as of December 31, 2024 and
2023, respectively, which reflects the amount recorded for the Preferred Units at their issuance date fair value, net of
issuance costs. As of the reporting date, there are no triggering, change of control, early redemption or monetization events
that are probable that would require us to revalue the Preferred Units.
21. Subsequent Events
Equity Distribution Agreement
On January 14, 2025, the Company entered into an Equity Distribution Agreement (the “Equity Distribution
Agreement”) with BMO Capital Markets Corp. (the “Agent”) pursuant to which the Company may sell, from time to time,
up to an aggregate offering price of $65.0 million of its common stock, par value $0.01 per share (the “Common Stock”),
in an “at-the-market” equity offering program (the “ATM Offering”) through the Agent.
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128
9.75% Senior Notes due 2028
On January 16, 2025, the Issuers issued $100.0 million aggregate principal amount of a new series of the Issuers’
9.75% Senior Notes due 2028 (the “2028 Notes”) in a private placement conducted pursuant to Rule 144A and Regulation
S under the Securities Act. The 2028 Notes were issued at 98% of par for net proceeds of approximately $96.2 million,
after deducting the initial purchasers’ discount and estimated offering expenses. The Company intends to use the net
proceeds from the offering of the Notes to redeem a portion of the Issuers’ outstanding 2026 Notes on or before April 15,
2025.
U.S. Department of Energy Facility
On January 10, 2025, MRL and the U.S. Department of Energy (the “DOE”), as guarantor and loan servicer, executed
a Loan Guarantee Agreement (“LGA”) for a $1.44 billion guaranteed loan facility to fund the construction and expansion
of the renewable fuels facility owned by MRL. The loan guarantee is structured in two tranches, with the first tranche of
approximately $782 million disbursed on February 18, 2025 (the “Funding Date”) to fund eligible expenses previously
incurred by MRL. MRL has the ability to draw additional tranches of up to approximately $658.0 million through a
delayed draw construction facility.
In connection with the funding of the first tranche under the DOE Facility, MRL terminated (i) the MRL Asset
Financing Arrangements, (ii) the MRL Term Loan Credit Agreement, (iii) the MRL Revolving Credit Agreement and (iv)
the MRL Supply and Offtake Agreement.
On the Funding Date, the Company used a portion of the proceeds from the first tranche of the DOE Facility to:
●
repurchase all of the equipment associated with the MRL Asset Financing Arrangements for approximately
$392.3 million (including exit fees of $23.0 million);
●
repay in full the outstanding loans of approximately $83.8 million under the MRL Term Loan Credit Agreement
(including a make-whole premium of approximately $9.4 million and an early termination premium of
approximately $0.7 million);
●
repay in full the outstanding loans of approximately $26.7 million under the MRL Revolving Credit Agreement;
and
●
repay in full the outstanding obligations of approximately $32.5 million under the MRL Supply and Offtake
Agreement.
Refer to Note 8 — “Long-Term Debt” for additional information regarding the MRL Asset Financing Arrangements,
the MRL Term Loan Credit Agreement and MRL Revolving Credit Agreement Refer to Note 7 — “Inventory Financing
Agreements” for further information regarding the MRL Supply and Offtake Agreement.
In addition, the Company received $40.0 million of cash from Stonebriar on the Funding Date in satisfaction of the
remaining purchase price for the Montana Refinery Asset Financing Arrangement. Refer to Note 8 — “Long-Term Debt”
for further information regarding the Montana Refinery Asset Financing Arrangement.
Sale of Assets Related to Industrial Portion of Royal Purple® Business
On February 28, 2025, the Company announced that it entered into a definitive agreement with a wholly owned
subsidiary of Lubrication Engineers, Inc., a portfolio company of Aurora Capital Partners, to sell the industrial portion of
its Royal Purple® business, for $110.0 million, subject to certain customary adjustments. The Company will retain the
consumer portion of the Royal Purple® business. The Company expects to use the sale proceeds to primarily reduce its
indebtedness. The transaction is expected to close in the first half of 2025, subject to customary regulatory approvals and
other closing conditions.
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129
Note 22. Revision of prior period presentation (Unaudited)
The Company has revised the presentation of the condensed consolidated balance sheet for the period ended December
31, 2023, the unaudited condensed consolidated statements of stockholders’ equity for the period ended September 30,
2023, and the unaudited earnings per share for the three and nine months ended September 30, 2023, all of which were
presented in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. The revision of the
presentation for the aforementioned items is to conform with the Company’s determination to account for the C-Corp
Conversion on a prospective basis; this determination was reached subsequent to the submission of the Company’s Quarter
Report on Form 10-Q for the quarter ended September 30, 2024.
The revision of the financial statement presentation for stockholders’ equity on the unaudited condensed consolidated
balance sheet for the period ended December 31, 2023 is summarized as follows.
December 31, 2023
(In millions, except share/unit data)
As Previously
Presented
Effect of
Revised Presentation
As Revised
Stockholders' equity / Partners’ capital (deficit):
Common stock: par value $0.01 per share,
700,000,000 shares authorized and 79,967,363 shares
issued and outstanding as of December 31, 2023
$
0.8
$
(0.8)
$
—
Additional paid-in capital
1,498.6
(1,498.6)
—
Accumulated deficit
(1,982.5)
1,982.5
—
Limited partners’ interest (79,967,363 units issued and
outstanding at December 31, 2023)
—
(484.4)
(484.4)
General partner’s interest
—
1.3
1.3
Accumulated other comprehensive loss
(7.2)
—
(7.2)
Total stockholders' equity / partners’ capital (deficit)
$
(490.3)
$
0.0
$
(490.3)
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130
The revision of the financial statement presentation for earnings per share included in the unaudited condensed
consolidated statements of operations for the three and nine months ended September 30, 2023 is summarized as follows.
Three Months Ended September 30, 2023
Nine Months Ended September 30, 2023
As Previously
Effect of
As Previously
Effect of
Presented
Revised
Presentation
As Revised
Presented
Revised
Presentation
As Revised
(In millions, except share/unit and per share/unit data)
Net income
$
99.8 $
— $
99.8
$
96.1 $
— $
96.1
Allocation of net income to partners:
Net income attributable to partners
$
— $
99.8 $
99.8
$
— $
96.1 $
96.1
Less:
General partners’ interest in net
income
—
2.0
2.0
—
1.9
1.9
Non-vested share based payments
—
0.1
0.1
—
0.1
0.1
Net income available to limited
partners
$
— $
97.7 $
97.7
$
— $
94.1 $
94.1
Weighted average limited partner units
outstanding:
Basic
80,172,810
80,172,810
80,046,930
— 80,046,930
Diluted
80,387,278
— 80,387,278
80,148,519
— 80,148,519
Earnings per share / Limited partners'
interest net income (loss) per unit:
Basic
$
1.24 $
(0.02)$
1.22
$
1.20 $
(0.02)$
1.18
Diluted
$
1.24 $
(0.02)$
1.22
$
1.20 $
(0.03)$
1.17
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131
The revision of the financial statement presentation for the unaudited consolidated statements of stockholders’ equity
as of September 30, 2023 is summarized as follows.
Accumulated OtherShares Issued Additional
Partners’ Capital (Deficit)
Comprehensive
Par
Paid-in
Accumulated
General
Limited
Loss
Value
Capital
Warrants
Deficit
Partner
Partners
Total
(In millions)
Balance at
June 30, 2023 (as
previously presented)
$
(8.2)$
0.8 $ 1,498.3 $
— $ (2,034.3)
$
—
$
—
$ (543.4)
Other comprehensive
income
0.1
—
—
—
—
—
—
0.1
Net income
—
—
—
—
99.8
—
—
99.8
Amortization of
phantom units
—
—
0.3
—
—
—
—
0.3
Balance at
September 30, 2023 (as
previously presented)
$
(8.1)$
0.8 $ 1,498.6 $
— $ (1,934.5)
$
—
$
—
$ (443.2)
Effect of Revised
Presentation
Balance of June 30,
2023 Stockholders'
equity / Partners'
capital (deficit)
—
(0.8) (1,498.3)
—
2,034.3
0.2
(535.4)
—
Net income / Net
income attributable to
partners
—
—
—
—
(99.8)
2.0
97.8
—
Amortization of
phantom units
—
—
(0.3)
—
—
—
0.3
—
Balance at September
30, 2023 (revision
impacts)
$
— $
(0.8)$ (1,498.6)$
— $ 1,934.5
$
2.2
$ (437.3)
$
—
As Revised
Balance at
June 30, 2023 (as
revised)
$
(8.2)$
— $
— $
— $
—
$
0.2
$ (535.4)
$ (543.4)
Other comprehensive
income
0.1
—
—
—
—
—
—
0.1
Net income / Net
income attributable to
partners
—
—
—
—
—
2.0
97.8
99.8
Amortization of
phantom units
—
—
—
—
—
—
0.3
0.3
Balance at
September 30, 2023 (as
revised)
$
(8.1)$
— $
— $
— $
—
$
2.2
$ (437.3)
$ (443.2)
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132
Accumulated
Other
Shares IssuedAdditional
Partners’ Capital (Deficit)
Comprehensive
Par
Paid-in
Accumulated
General
Limited
Loss
Value
Capital Warrants
Deficit
Partner
Partners
Total
(In millions)
Balance at December 31, 2022 (as
previously presented)
$
(8.3)$
0.8 $ 1,504.8 $
— $
(2,030.6)
$
—
$
—
$ (533.3)
Other comprehensive income
0.2
—
—
—
—
—
—
0.2
Net income
—
—
—
—
96.1
—
—
96.1
Settlement of tax withholdings on
equity-based incentive compensation
—
—
(9.6)
—
—
—
—
(9.6)
Settlement of phantom units
—
—
2.7
—
—
—
—
2.7
Amortization of phantom units
—
—
0.7
—
—
—
—
0.7
Balance at September 30, 2023 (as
previously presented)
$
(8.1)$
0.8 $ 1,498.6 $
— $
(1,934.5)
$
—
$
—
$ (443.2)
Effect of Revised Presentation
Balance of December 31, 2022
Stockholders' equity / Partners' capital
(deficit)
—
(0.8) (1,504.8)
—
2,030.6
0.3
(525.3)
—
Net income / Net income attributable
to partners
—
—
—
—
(96.1)
1.9
94.2
—
Settlement of tax withholdings on
equity-based incentive compensation
—
—
9.6
—
—
—
(9.6)
—
Settlement of phantom units
—
—
(2.7)
—
—
—
2.7
—
Amortization of phantom units
—
—
(0.7)
—
—
—
0.7
—
Balance at September 30, 2023 (revision
impacts)
$
— $
(0.8)$ (1,498.6)$
— $
1,934.5
$
2.2
$
(437.3)
$
—
As Revised
Balance at December 31, 2022 (as
revised)
$
(8.3)$
— $
— $
— $
—
$
0.3
$
(525.3)
$ (533.3)
Other comprehensive income
0.2
—
—
—
—
—
—
0.2
Net income / Net income attributable
to partners
—
—
—
—
—
1.9
94.2
96.1
Settlement of tax withholdings on
equity-based incentive compensation
—
—
—
—
—
—
(9.6)
(9.6)
Settlement of phantom units
—
—
—
—
—
—
2.7
2.7
Amortization of phantom units
—
—
—
—
—
—
0.7
0.7
Balance at September 30, 2023 (as
revised)
$
(8.1)$
— $
— $
— $
—
$
2.2
$
(437.3)
$ (443.2)
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133
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(e) of the Exchange Act, we have evaluated, under the supervision and with the
participation of our management, including our principal executive officer and principal financial officer, the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act) as of the end of the period covered by this Annual Report. Our disclosure controls and procedures are
designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under
the Exchange Act is accumulated and communicated to our management, including our principal executive officer and
principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon the
evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and
procedures were effective as of December 31, 2024.
Management’s Annual Report on Internal Control Over Financial Reporting
The management of Calumet, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal
control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of the financial statements in accordance with U.S. generally
accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and board of directors of the Company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may
deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31,
2024, based on criteria for effective internal control over financial reporting described in “Internal Control - Integrated
Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)
(“COSO”), and has concluded that we maintained effective internal control over financial reporting as of December 31,
2024.
Grant Thornton LLP, an independent registered public accounting firm, has audited the effectiveness of our internal
controls over financial reporting as of December 31, 2024, as stated in their report, which is included herein.
Remediation of Material Weakness
As of March 31, 2024, we have remediated the previously disclosed material weakness related to addressing
subsequent measurement of redeemable noncontrolling interests, including consideration of attribution of income and loss
to redeemable noncontrolling interests. The controls continued to operate effectively as of December 31, 2024.
With oversight from senior management, as well as oversight by the audit committee of the board of directors, we
implemented changes to our internal control over financial reporting, which contributed to the remediation of the material
weakness described above. Remediation activities included the following:
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134
●
Prepared and reviewed technical accounting memos for material non-routine transactions.
●
Engaged third party resources with technical accounting expertise to assist with the evaluation of the accounting
treatment for subsequent measurement of redeemable noncontrolling interests.
●
Ensured that appropriate controls were in place to evaluate the ongoing accounting for redeemable noncontrolling
interests.
Changes in Internal Control over Financial Reporting
Other than those described above, no changes in our internal control over financial reporting (as defined in Rules 13a-
15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended December 31, 2024 that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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135
Item 9B. Other Information
(c) Trading Plans
On November 15, 2024, Stephen Mawer, chairman of the board of directors of the Company, as Authorized Individual
of the General Partner, Mawer Enterprises LLC, and on behalf of Mawer Investments Ltd., adopted a trading plan (the
“Plan”) intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. Mr. Mawer has a controlling
interest in Mawer Enterprises LLC, the general partner of Mawer Investments Ltd. The Plan will commence on March 5,
2025 and expire on December 31, 2025. The Plan provides for the potential sale of up to 40,205 shares of common stock of
Calumet, Inc. pursuant to the terms of the Plan.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
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136
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by Items 401, 405, 406, 407(c)(3), (d)(4) and (d)(5) and 408(b) of Regulation S-K in
response to this item will be set forth in our definitive proxy statement for the 2025 annual meeting of stockholders and is
incorporated herein by reference.
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137
Item 11. Executive and Director Compensation
The information required by Items 402 and 407(e)(4) and (e)(5) of Regulation S-K in response to this item will be set
forth in our definitive proxy statement for the 2025 annual meeting of stockholders and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The equity compensation plan information required by Item 401(d) and the information required by Item 403 of
Regulation S-K in response to this item will be set forth in our definitive proxy statement for the 2025 annual meeting of
stockholders and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required by Items 404 and 407(a) of Regulation S-K in response to this item will be set forth in our
definitive proxy statement for the 2025 annual meeting of stockholders and is incorporated herein by reference.
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138
Item 14. Principal Accountant Fees and Services
The information required by Item 9(e) of Schedule 14A in response to this item will be set forth in our definitive proxy
statement for the 2025 annual meeting of stockholders and is incorporated herein by reference.
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139
PART IV
Item 15. Exhibits
(a)(1) Consolidated Financial Statements
The consolidated financial statements of Calumet, Inc. are included in Part II, Item 8 “Financial Statements and
Supplementary Data.”
(a)(2) Financial Statement Schedules
All schedules are omitted because they are not applicable, or the required information is shown in the consolidated
financial statements or notes thereto.
(a)(3) Exhibits
See Index to Exhibits of this Annual Report.
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140
Index to Exhibits
Exhibit Number
Description
2.1
—
Partnership Restructuring Agreement, dated as of November 9, 2023, by and among the
Partnership, the General Partner and the other parties thereto (incorporated by reference to
Exhibit 2.1 to the Partnership’s Current Report on Form 8-K filed with the Commission on
November 9, 2023 (File No. 000-51734)).
2.2
—
First Amendment to Partnership Restructuring Agreement, dated as of February 9, 2024, by
and among Calumet Specialty Products Partners, L.P., Calumet GP, LLC and the other parties
thereto (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form
8-K filed with the Commission on February 12, 2024 (File No. 000-51734)).
2.3
—
Conversion Agreement, dated as of February 9, 2024, by and among Calumet Specialty
Products Partners, L.P., Calumet GP, LLC, Calumet, Inc., Calumet Merger Sub I LLC,
Calumet Merger Sub II LLC and the other parties thereto (incorporated by reference to Exhibit
10.2 to the Partnership’s Current Report on Form 8-K filed with the Commission on February
12, 2024 (File No. 000-51734)).
2.4
—
First Amendment to Conversion Agreement, dated as of April 17, 2024, by and among
Calumet , Inc., Calumet Specialty Products Partners, L.P., Calumet GP, LLC, Calumet Merger
Sub I LLC, Calumet Merger Sub II LLC and the other parties thereto (incorporated by
reference to Exhibit 2.1 to the Partnership’s Current Report on Form 8-K filed with the
Commission on April 19, 2024 (File No. 000-51734)).
3.1
—
Amended and Restated Certificate of Incorporation of Calumet, Inc. (incorporated by
reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the
Commission on July 10, 2024 (File No. 001-42172)).
3.2
—
Amended and Restated Bylaws of Calumet, Inc. (incorporated by reference to Exhibit 3.2 to
the Registrant’s Current Report on Form 8-K filed with the Commission on July 10, 2024 (File
No. 001-42172)).
4.1*
—
Description of Capital Stock.
4.2
—
Indenture, dated January 20, 2022, by and among Calumet Specialty Products Partners, L.P.,
Calumet Finance Corp., the guarantors party thereto and Wilmington Trust, National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership’s Current
Report on Form 8-K filed with the Commission on January 24, 2022 (File No. 000-51734)).
4.3
—
Form of 8.125% Senior Notes due 2027 (included in Exhibit 4.2).
4.4
—
Indenture, dated June 27, 2023, by and among Calumet Specialty Products Partners, L.P.,
Calumet Finance Corp., the guarantors party thereto and Wilmington Trust, National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership’s Current
Report on Form 8-K filed with the Commission on June 29, 2023 (File No. 000-51734)).
4.5
—
Form of 9.75% Senior Notes due 2028 (included in Exhibit 4.4).
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141
Exhibit Number
Description
4.6
—
Indenture, dated March 7, 2024, by and among Calumet Specialty Products Partners, L.P.,
Calumet Finance Corp., the guarantors party thereto and Wilmington Trust, National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership's Current
Report on Form 8-K filed with the Commission on March 12, 2024 (File No. 000-51734)).
4.7
—
Form of 9.25% Senior Secured First Lien Notes due 2029 (included in Exhibit 4.6).
4.8
—
Indenture, dated November 25, 2024, by and among Calumet Specialty Products Partners,
L.P., Calumet Finance Corp., the guarantors party thereto and Wilmington Trust, National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current
Report on Form 8-K filed with the Commission on November 25, 2024 (File No. 001-42172)).
4.9
—
Form of 11.00% Senior Notes due 2026 (included in Exhibit 4.8).
4.10
—
Indenture, dated January 16, 2025, by and among Calumet Specialty Products Partners, L.P.,
Calumet Finance Corp., the guarantors party thereto and Wilmington Trust, National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K filed with the Commission on January 16, 2025 (File No. 001-42172)).
4.11
—
Form of 9.75% Senior Notes due 2028 (included in Exhibit 4.10).
4.12
—
Registration Rights Agreement, dated as of July 10, 2024, by and among Calumet, Inc. and the
stockholders party thereto (incorporated by reference to Exhibit 4.1 to the Registrant’s Current
Report on Form 8-K filed with the Commission on July 10, 2024 (File No. 001-42172)).
4.13
—
Stockholders’ Agreement, dated as of July 10, 2024, by and between Calumet, Inc. and The
Heritage Group (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on
Form 8-K filed with the Commission on July 10, 2024 (File No. 001-42172)).
4.14
—
Warrant Agreement, dated as of July 10, 2024, by and among Calumet, Inc. and
Computershare Inc. and Computershare Trust Company, N.A., as warrant agent (incorporated
by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed with the
Commission on July 10, 2024 (File No. 001-42172)).
4.15
—
Form of Warrant Certificate (included in Exhibit 4.14).
10.1
—
Amended Crude Oil Sale Contract, effective April 1, 2008, between Plains Marketing, L.P.
and Calumet Shreveport Fuels, LLC (incorporated by reference to Exhibit 10.1 to the
Partnership’s Current Report on Form 8-K filed with the Commission on March 20, 2008 (File
No. 000-51734)).
10.2
—
Third Amended and Restated Credit Agreement, dated as of February 23, 2018, by and among
Calumet Specialty Products Partners, L.P. and certain of its subsidiaries as Borrowers, certain
of its subsidiaries as Guarantors, the Lenders, Bank of America, N.A., as Agent, JPMorgan
Chase Bank, N.A and Wells Fargo Bank, N.A., as Co-Syndication Agents (incorporated by
reference from exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed with the
commission on March 1, 2018 (File-No. 000-51734)).
10.3
—
First Amendment to Third Amended and Restated Credit Agreement, dated as of September 4,
2019, by and among Calumet Specialty Products Partners, L.P. and certain of its subsidiaries
as Borrowers, certain of its subsidiaries as Guarantors, the Lenders, Bank of America, N.A., as
Agent, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., as Co-Syndication Agents
(incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K
filed with the Commission on September 6, 2019 (File No. 000-51734)).
10.4
—
Consent and Amendment No. 2 to Third Amended and Restated Credit Agreement dated as of
November 18, 2021, by and among Calumet Specialty Products Partners, L.P., Bank of
America, N.A., and the other parties thereto (incorporated by reference to Exhibit 10.1 to the
Partnership’s Current Report on Form 8-K filed with the Commission on November 24, 2021
(File No. 000-51734)).
10.5
—
Third Amendment to Credit Agreement dated as of January 20, 2022, by and among Calumet
Specialty Products Partners, L.P., Bank of America, N.A., and the other parties signatory
thereto (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form
8-K filed with the Commission on January 24, 2022 (File No. 000-51734)).
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142
Exhibit Number
Description
10.6
—
Amended and Restated Collateral Trust Agreement, dated as of April 20, 2016, among
Calumet Specialty Products Partners, L.P., the obligors party thereto, the secured hedge
counterparties party thereto and Wilmington Trust, National Association, as Trustee and
Collateral Trustee (incorporated by reference to exhibit 10.1 to the Partnership’s Current
Report on Form 8-K filed with the commission on April 21, 2016 (File No. 000-51734)).
10.7
—
Second Amended and Restated Intercreditor Agreement, dated April 20, 2016, by and among
the Collateral Trustee, Bank of America, N.A., as administrative agent, and the obligors named
therein (incorporated by reference to exhibit 10.2 to the Partnership’s Current Report on Form
8-K filed with the commission on April 21, 2016 (File No. 000-51734)).
10.8†
—
Employment Letter, effective as of February 29, 2016, by and between Calumet GP, LLC and
Bruce A. Fleming (incorporated by reference to Exhibit 10.27 to the Partnership’s Annual
Report on Form 10-K filed with the Commission on March 4, 2022 (File No. 000-51734)).
10.9†
—
Scott Obermeier Promotion Letter, effective as of January 27, 2020, between Calumet GP,
LLC and Scott Obermeier (incorporated by reference to Exhibit 10.28 to the Partnership’s
Annual Report on Form 10-K filed with the Commission on March 4, 2022 (File No. 000-
51734)).
10.10
—
Amendment No. 1 to Amended and Restated Collateral Trust Agreement, dated as of July 31,
2020, by and among the Partnership, the obligors party thereto and Wilmington Trust, National
Association, as collateral trustee (incorporated by reference to Exhibit 10.1 to the Partnership’s
Current Report on Form 8-K filed with the Commission on August 5, 2020 (File No. 000-
51734)).
10.11
—
Consent to Third Amended and Restated Credit Agreement, dated July 3, 2020, by and among
Calumet Specialty Products Partners, L.P. and certain of its subsidiaries, as Borrowers, the
Lenders party thereto and Bank of America, N.A., as Agent (incorporated by reference to
Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed with the Commission on
July 6, 2020 (File No. 000-51734)).
10.12
—
Master Lease Agreement, together with Property Schedule No. 1 thereto, each dated as of
February 12, 2021, and each by and between Stonebriar Commercial Finance LLC and
Calumet Shreveport Refining, LLC (incorporated by reference to Exhibit 10.1 to the
Partnership’s Current Report on Form 8-K filed with the commission on February 16, 2021
(File No. 000-51734)).
10.13†
—
Todd Borgmann Promotion Letter, effective as of May 1, 2022, between Calumet GP, LLC and
Todd Borgmann (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report
on Form 8-K filed with the Commission on March 1, 2022 (File No. 000-51734)).
10.14
—
Preferred Unit Purchase Agreement, among Montana Renewables Holdings LLC, Calumet
Specialty Products Partners, L.P., WPGG 14 United Aggregator, L.P. and, solely for the
purposes of Section 4.4, Calumet GP, LLC, dated as of August 5, 2022 (incorporated by
reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the
Commission on November 9, 2022 (File No. 000-51734)).
10.15
—
Second Amended and Restated Limited Liability Company Agreement of Montana
Renewables Holdings LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed with the Commission on August 10, 2022 (File No. 000-
51734)).
10.16†
—
Change of Control Protection Plan, effective March 13, 2023 (incorporated by reference to
Exhibit 10.49 to the Partnership’s Annual Report on Form 10-K filed with the Commission on
March 15, 2023 (File No. 000-51734)).
10.17†
—
Employment Letter, effective as of September 11, 2023, by and between Calumet GP, LLC
and David A. Lunin (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly
Report on Form 10-Q filed with the Commission on November 9, 2023 (File No. 000-51734)).
10.18
—
Monetization Master Agreement, dated as of January 17, 2024, among J. Aron & Company
LLC, Calumet Shreveport Refining, LLC, Calumet Refining, LLC and Calumet Specialty
Products Partners, L.P. (incorporated by reference to Exhibit 10.1 to the Partnership’s Current
Report on Form 8-K filed with the Commission on January 24, 2024 (File No. 000-51734)).
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143
Exhibit Number
Description
10.19
—
Financing Agreement, dated as of January 17, 2024, among J. Aron & Company LLC,
Calumet Shreveport Refining, LLC and Calumet Refining, LLC (incorporated by reference to
Exhibit 10.2 to the Partnership’s Current Report on Form 8-K filed with the Commission on
January 24, 2024 (File No. 000-51734)).
10.20
—
Supply and Offtake Agreement, dated as of January 17, 2024, among J. Aron & Company
LLC, Calumet Shreveport Refining, LLC and Calumet Refining, LLC (incorporated by
reference to Exhibit 10.3 to the Partnership’s Current Report on Form 8-K filed with the
Commission on January 24, 2024 (File No. 000-51734)).
10.21
—
Fourth Amendment to Third Amended and Restated Credit Agreement, dated as of January 17,
2024, by and among Calumet Specialty Products Partners, L.P., Bank of America, N.A, and
the other parties signatory thereto (incorporated by reference to Exhibit 10.4 to the
Partnership’s Current Report on Form 8-K filed with the Commission on January 24, 2024
(File No. 000-51734)).
10.22
—
Amendment No. 2 to Amended and Restated Collateral Trust Agreement and Second
Amended and Restated Security and Pledge Agreement, dated as of March 8, 2024, by and
among Calumet Specialty Products Partners, L.P., the obligors party thereto and Wilmington
Trust, National Association, as collateral trustee (incorporated by reference to Exhibit 10.1 to
the Partnership’s Current Report on Form 8-K filed with the Commission on March 12, 2024
(File No. 000-51734)).
10.23†*
—
Calumet, Inc. Executive Deferred Compensation Plan, dated July 10, 2024.
10.24†
—
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed with the Commission on July 10, 2024 (File
No. 001-42172)).
10.25†
—
Calumet, Inc. Amended and Restated Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on
July 10, 2024 (File No. 001-42172)).
10.26
—
Fifth Amendment to Third Amended and Restated Credit Agreement, dated as of July 10,
2024, by and among Calumet, Inc., Calumet Specialty Products Partners, L.P., Bank of
America, N.A., and the other parties signatory thereto (incorporated by reference to Exhibit
10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on
November 12, 2024 (File No. 001-42172)).
10.27
—
Omnibus Amendment Agreement, dated July 10, 2024, by and among Calumet, Inc., Calumet
Specialty Products Partners, L.P., J. Aron & Company LLC and the other parties thereto
(incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q
filed with the Commission on November 12, 2024 (File No. 001-42172)).
10.28
—
Master Lease Agreement, dated as of September 30, 2024, by and between Calumet Montana
Refining, LLC and Stonebriar Commercial Finance LLC (incorporated by reference to Exhibit
10.5 to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on
November 12, 2024 (File No. 001-42172)).
10.29
—
Equipment Schedule No. 1 to Master Lease Agreement, dated as of September 30, 2024, by
and between Calumet Montana Refining, LLC and Stonebriar Commercial Finance LLC
(incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q
filed with the Commission on November 12, 2024 (File No. 001-42172)).
10.30
—
Consent and Sixth Amendment to the Third Amended and Restated Credit Agreement, dated
as of September 30, 2024, by and between Calumet, Inc., Bank of America N.A., and the other
parties signatory thereto (incorporated by reference to Exhibit 10.11 to the Registrant’s
Quarterly Report on Form 10-Q filed with the Commission on November 12, 2024 (File No.
001-42172)).
10.31
—
Second Amendment to the Monetization Master Agreement, dated as of September 30, 2024,
by and among Calumet, Inc., J. Aron & Company LLC and the other parties thereto
(incorporated by reference to Exhibit 10.12 to the Registrant’s Quarterly Report on Form 10-Q
filed with the Commission on November 12, 2024 (File No. 001-42172)).
Table of Contents
144
Exhibit Number
Description
10.32#
—
Loan Guarantee Agreement, dated January 10, 2025, by and among Montana Renewables,
LLC and the U.S. Department of Energy (incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed with the Commission on January 10, 2025 (File
No. 001-42172)).
10.33*
—
Seventh Amendment to Third Amended and Restated Credit Agreement, dated as of January
6, 2025, by and among Calumet, Inc., Bank of America, N.A., and the other parties signatory
thereto.
19.1*
—
Insider Trading Policy of Calumet, Inc.
21.1*
—
List of Subsidiaries of Calumet, Inc.
23.1*
—
Consent of Grant Thornton LLP, independent registered public accounting firm.
23.2*
—
Consent of Ernst & Young, LLP, independent registered public accounting firm.
31.1*
—
Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
—
Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
—
Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the
Sarbanes-Oxley Act of 2002.
97.1*
—
Calumet, Inc. Clawback Policy.
101.INS*
—
Inline XBRL Instance Document - the instance document does not appear in the Interactive
Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*
—
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
—
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
—
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
—
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
—
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*
—
The cover page from the Company’s Annual Report on Form 10-K for the year ended
December 31, 2024, formatted Inline XBRL (included within the Exhibit 101 attachments).
†
Identifies management contract and compensatory plan arrangements.
*
Filed herewith.
**
Furnished herewith.
#
Certain confidential information contained in this agreement has been omitted because it is both (i) not material
and (ii) the type of information that the Company treats as private or confidential.
Item 16. Form 10-K Summary
None.
Table of Contents
145
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CALUMET, INC.
By: /s/ Todd Borgmann
Todd Borgmann
President and Chief Executive Officer
Date: February 28, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ Todd Borgmann
President and Chief Executive Officer
Date: February 28, 2025
Todd Borgmann
(Principal Executive Officer)
/s/ David Lunin
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
Date: February 28, 2025
David Lunin
/s/ Vincent Donargo
Chief Accounting Officer
(Principal Accounting Officer)
Date: February 28, 2025
Vincent Donargo
/s/ Stephen P. Mawer
Director and Chairman of the Board
Date: February 28, 2025
Stephen P. Mawer
/s/ James S. Carter
Director
Date: February 28, 2025
James S. Carter
/s/ Karen A. Twitchell
Director
Date: February 28, 2025
Karen A. Twitchell
/s/ Paul C. Raymond III
Director
Date: February 28, 2025
Paul C. Raymond III
/s/ Daniel J. Sajkowski
Director
Date: February 28, 2025
Daniel J. Sajkowski
/s/ Amy M. Schumacher
Director
Date: February 28, 2025
Amy M. Schumacher
/s/ Daniel L. Sheets
Director
Date: February 28, 2025
Daniel L. Sheets
/s/ Jennifer G. Straumins
Director
Date: February 28, 2025
Jennifer G. Straumins
/s/ John (“Jack”) G. Boss
Director
Date: February 28, 2025
John (“Jack”) G. Boss
EXHIBIT 4.1
1
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of Calumet, Inc. (the “Company”) consists of 700,000,000 shares of common stock,
$0.01 par value per share, and 100,000,000 shares of preferred stock, $0.01 par value per share.
Common Stock
Holders of shares of common stock are entitled to one vote for each share held of record on all matters on which
stockholders are entitled to vote generally, including the election or removal of directors elected by the Company’s
stockholders generally. The holders of the common stock do not have cumulative voting rights in the election of
directors.
Holders of shares of common stock are entitled to receive dividends to the extent permitted by applicable law
when, as and if declared by the Company’s board of directors (the “Board”) out of funds legally available therefor,
subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment
of dividends imposed by the terms of any outstanding preferred stock.
Upon the Company’s liquidation, dissolution or winding up and after payment in full of all amounts required to
be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of
common stock will be entitled to receive pro rata the Company’s remaining assets available for distribution.
All outstanding shares of common stock are fully paid and non-assessable. The common stock is not subject to
further calls or assessments by the Company. Holders of shares of common stock do not have preemptive,
subscription, redemption or conversion rights. There are no redemption or sinking fund provisions applicable to the
common stock. The rights powers, preferences and privileges of the common stock are subject to those of the holders
of any shares of preferred stock or any other series or class of stock that the Company may authorize and issue in the
future.
Preferred Stock
No shares of preferred stock are issued or outstanding. The Company’s amended and restated certificate of
incorporation authorizes the Board to establish one or more series of preferred stock (including convertible preferred
stock). Unless required by law or any stock exchange, the authorized shares of preferred stock will be available for
issuance without further action by the holders of the common stock. The Board is able to determine, with respect to
any series of preferred stock, the powers (including voting powers), preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or restrictions thereof, including, without limitation:
•
the designation of the series;
•
the number of shares of the series, which the Board may, except where otherwise provided in the preferred
stock designation, increase (but not above the total number of authorized shares of the class) or decrease
(but not below the number of shares then outstanding);
•
whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;
•
the dates at which dividends, if any, will be payable;
•
the redemption or repurchase rights and price or prices, if any, for shares of the series;
•
the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;
EXHIBIT 4.1
2
•
the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company’s affairs;
•
whether the shares of the series will be convertible into shares of any other class or series, or any other
security, of the Company or any other entity, and, if so, the specification of the other class or series or other
security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which
the shares will be convertible and all other terms and conditions upon which the conversion may be made;
•
restrictions on the issuance of shares of the same series or of any other class or series; and
•
the voting rights, if any, of the holders of the series.
Dividends
The Delaware General Corporation Law (the “DGCL”) permits a corporation to declare and pay dividends out of
“surplus” or, if there is no “surplus,” out of its net profits for the fiscal year in which the dividend is declared and/or
the preceding fiscal year. “Surplus” is defined as the excess of the net assets of the corporation over the amount
determined to be the capital of the corporation by its board of directors. The capital of the corporation is typically
calculated to be (and cannot be less than) the aggregate par value of all issued shares of capital stock. Net assets equals
the fair value of the total assets minus total liabilities. The DGCL also provides that dividends may not be paid out of
net profits if, after the payment of the dividend, remaining capital would be less than the capital represented by the
outstanding stock of all classes having a preference upon the distribution of assets. Declaration and payment of any
dividend will be subject to the discretion of the Board.
The Company has no current plans to pay dividends on the common stock. Any decision to declare and pay
dividends in the future will be made at the sole discretion of the Board and will depend on, among other things, the
Company’s results of operations, cash requirements, financial condition, contractual restrictions and other factors that
the Board may deem relevant. Because the Company is a holding company and has no direct operations, the Company
will only be able to pay dividends from funds it receives from its subsidiaries. In addition, the Company’s ability to
pay dividends will be limited by covenants in its existing indebtedness and may be limited by the agreements
governing other indebtedness that the Company or its subsidiaries incur in the future.
Annual Stockholder Meetings
The Company’s amended and restated bylaws provide that annual stockholder meetings will be held at a date,
time and place, if any, as exclusively selected by the Board. To the extent permitted under applicable law, the
Company may conduct meetings by remote communications, including by webcast.
Anti-Takeover Effects of the Company’s Amended and Restated Certificate of Incorporation, Amended and
Restated Bylaws and Certain Provisions of Delaware Law
The Company’s amended and restated certificate of incorporation, amended and restated bylaws and the DGCL
contain provisions, which are summarized in the following paragraphs, which are intended to enhance the likelihood of
continuity and stability in the composition of the Board. These provisions are intended to avoid costly takeover battles,
reduce the Company’s vulnerability to a hostile or abusive change of control and enhance the ability of the Board to
maximize stockholder value in connection with any unsolicited offer to acquire the Company. However, these
provisions may have an anti-takeover effect and may delay, deter or prevent a merger or acquisition of the Company
by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best
interest, including those attempts that might result in a premium over the prevailing market price for the shares of
common stock held by stockholders.
Authorized but Unissued Capital Stock
Delaware law does not require stockholder approval for any issuance of shares that are authorized and available
for issuance. However, the listing requirements of Nasdaq, which would apply so long as the common stock remains
listed on Nasdaq, require stockholder approval of certain issuances equal to or exceeding 20% of the
EXHIBIT 4.1
3
then-outstanding voting power of the Company’s capital stock or the-then outstanding number of shares of common
stock. These additional shares may be used for a variety of corporate purposes, including future public offerings, to
raise additional capital or to facilitate acquisitions.
The Board may generally issue shares of one or more series of preferred stock on terms calculated to discourage,
delay or prevent a change of control of the Company or the removal of its management. Moreover, the Company’s
authorized but unissued shares of preferred stock will be available for future issuances in one or more series without
stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise
additional capital, to facilitate acquisitions and in connection with employee benefit plans.
One of the effects of the existence of authorized and unissued and unreserved common stock or preferred stock
may be to enable the Board to issue shares to persons friendly to current management, which issuance could render
more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy
contest or otherwise, and thereby protect the continuity of the Company’s management and possibly deprive the
Company’s stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market
prices.
Classified Board of Directors
The Company’s amended and restated certificate of incorporation provides that the Board will be divided into
three classes of directors, with the directors serving three-year terms (other than with respect to the initial terms of the
Class I and Class II directors, which will be one and two years, respectively). As a result, approximately one-third of
the Board will be elected each year. The classification of directors will have the effect of making it more difficult for
stockholders to change the composition of the Board. The Company’s amended and restated certificate of
incorporation and amended and restated bylaws provide that, subject to the limitations set forth in the Company’s
amended and restated certificate of incorporation with respect to the rights of The Heritage Group to designate for
nomination a certain number of directors and any rights of holders of preferred stock to elect additional directors under
specified circumstances, the number of directors will be fixed from time to time exclusively pursuant to a resolution
adopted by the Board.
Delaware Law
The Company will not be subject to the provisions of Section 203 of the DGCL, regulating corporate takeovers.
Under the Company’s amended and restated certificate of incorporation, the Company is prohibited from engaging in
any business combination (as defined below) with any interested stockholder (as defined below) for a period of three
years following the date that the stockholder became an interested stockholder, unless:
•
the business combination or the transaction which resulted in the interested stockholder becoming an
interested stockholder is approved by the Board before the date the interested stockholder attained that
status;
•
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced (excluding certain shares); or
•
at or subsequent to such time the business combination is approved by the Board and authorized at a
meeting of stockholders by at least 66 2/3% of the outstanding voting stock that is not owned by the
interested stockholder.
For purposes of these provisions, a “business combination” includes, among other things, a merger, asset or
stock sale, or other transaction resulting in a financial benefit to the interested stockholder, and an “interested
stockholder” includes a person who, together with affiliates and associates, owns, or did own within three years prior
to the determination of interested stockholder status, 15% or more of the Company’s outstanding voting stock.
EXHIBIT 4.1
4
Removal of Directors; Vacancies and Newly Created Directorships
Under the DGCL, unless otherwise provided in the Company’s amended and restated certificate of
incorporation, directors serving on a classified board may be removed by the stockholders only for cause. The
Company’s amended and restated certificate of incorporation provides that, subject to the rights granted therein,
directors may be removed only for cause, and only upon the affirmative vote of holders of at least 66 2/3% of the
voting power of all the then-outstanding shares of stock entitled to vote generally in the election of directors, voting
together as a single class.
In addition, the Company’s amended and restated certificate of incorporation also provides that, subject to the
rights granted therein, any newly created directorship on the Board that results from an increase in the number of
directors and any vacancy occurring in the Board may only be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director.
Quorum
Except as otherwise provided under the Company’s amended and restated certificate of incorporation, for so
long as the THG Stockholders (as defined in the Company’s amended and restated certificate of incorporation) and
their respective Affiliates (as defined in the Company’s amended and restated certificate of incorporation) own 15% or
more of the outstanding shares of common stock, the attendance of at least one director designated by the THG
Stockholders shall be required to constitute a quorum of the Board (or any committee of the Board on which a director
designated by the THG Stockholders serves) for the transaction of business with respect to such action or decision
unless each director designated by the THG Stockholders provides notice to the remaining members of the Board, the
Chairman of the Board or the secretary of the Company waiving such right to be included in quorum at such meeting.
If there is less than a quorum at any meeting of the Board (or any committee of the Board on which a director
designated by the THG Stockholders serves), a majority of the directors present may adjourn the meeting to a time no
earlier than five business days after notice of such adjournment. If a director designated by the THG Stockholders is
not present at the next meeting following an adjournment, then the presence of a number of directors exceeding 50%
of the entire Board (or exceeding 50% of the entire committee, as applicable) entitled to vote shall constitute a quorum
for the next meeting.
No Cumulative Voting
Under Delaware law, the right to vote in the election of directors cumulatively does not exist unless the
certificate of incorporation specifically authorizes cumulative voting. The Company’s amended and restated certificate
of incorporation does not authorize cumulative voting. Therefore, stockholders holding a majority in voting power of
the shares of the Company’s stock entitled to vote generally in the election of directors will be able to elect all the
Company’s directors.
Special Stockholder Meetings
The Company’s amended and restated certificate of incorporation provides that special meetings of the
Company’s stockholders may be called at any time only by the Board, and may not be called by any other person. The
Company’s amended and restated bylaws prohibit the conduct of any business at a special meeting other than as
specified in the notice for such meeting. These provisions may have the effect of deterring, delaying or discouraging
hostile takeovers, or changes in control or management of the Company.
Director Nominations and Stockholder Proposals
The Company’s amended and restated bylaws establish advance notice procedures with respect to stockholder
proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction
of the Board or a committee of the Board or nominations made pursuant to the Company’s amended and restated
certificate of incorporation. In order for any matter to be “properly brought” before a meeting, a stockholder will have
to comply with advance notice requirements and provide the Company with certain information. Generally, to be
timely, a stockholder’s notice must be received at the Company’s principal executive offices not less than 90 days nor
more than 120 days prior to the first anniversary date of the immediately preceding annual
EXHIBIT 4.1
5
meeting of stockholders. The Company’s amended and restated bylaws also specify requirements as to the form and
content of a stockholder’s notice. The Company’s amended and restated bylaws allow the chairperson of the meeting at
a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of
precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions
may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s
own slate of directors or otherwise attempting to influence or obtain control of the Company.
Consent Rights
The Company’s amended and restated certificate of incorporation provides that, until the earlier of the THG
Stockholders and their respective Affiliates no longer owning at least 5% of the outstanding shares of common stock
and July 10, 2027, each of the following will require the consent of the THG Stockholders: (i) any amendment,
modification or restatement of the organizational documents of the Company (including the amended and restated
certificate of incorporation and amended and restated bylaws of the Company) or any of its significant subsidiaries, (ii)
any increase or decrease in the size of the Board, (iii) any appointment or removal of the Chairman of the Board or
Chief Executive Officer of the Company, and (iv) initiating any voluntary liquidation, winding up or filing any petition
in bankruptcy of the Company or any of its significant subsidiaries.
No Stockholder Action by Written Consent
The Company’s amended and restated certificate of incorporation provides that any action required or permitted
to be taken by the stockholders must be taken at a duly called annual or special meeting of stockholders and may not
be taken by any consent in writing of such stockholders.
Supermajority Provisions
The Company’s amended and restated certificate of incorporation and amended and restated bylaws provide that,
except as otherwise provided in the Company’s amended and restated certificate of incorporation, the board of
directors is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, the
Company’s bylaws without a stockholder vote in any matter not inconsistent with the laws of the State of Delaware or
the Company’s amended and restated certificate of incorporation. Any amendment, alteration, rescission or repeal of
the Company’s bylaws by the Company’s stockholders requires the affirmative vote of the holders of at least 66 2/3%
in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class.
The DGCL provides generally that the affirmative vote of the holders of a majority of the outstanding shares
entitled to vote thereon, voting together as a single class, is required to amend a corporation’s certificate of
incorporation, unless the certificate of incorporation requires a greater percentage.
The Company’s amended and restated certificate of incorporation provides that, except as otherwise provided
therein, the following provisions in the Company’s amended and restated certificate of incorporation may be amended,
altered, repealed or rescinded only by the affirmative vote of the holders of at least 66 2/3% in voting power of all
outstanding shares of the Company’s stock entitled to vote thereon, voting together as a single class:
•
the provision requiring a 66 2/3% supermajority vote for stockholders to amend our amended and restated
bylaws;
•
the provisions providing for a classified board of directors (the election and term of our directors);
•
the provisions regarding resignation and removal of directors;
•
the provisions regarding competition and corporate opportunities;
•
the provisions opting out of Section 203 of the DGCL (as described above);
•
the provisions regarding stockholder action by written consent;
EXHIBIT 4.1
6
•
the provisions regarding calling special meetings of stockholders;
•
the provisions relating to annual meetings of stockholders;
•
the provisions relating to the forum selection;
•
the provisions regarding filling vacancies on our board of directors and newly-created directorships;
•
the provisions eliminating monetary damages to the fullest extent permitted by the DGCL for breaches of
fiduciary duty by a director or officer;
•
the amendment provision requiring that the above provisions be amended only with a 66 2/3%
supermajority vote; and
•
certain defined terms used in the Company’s amended and restated certificate of incorporation.
The combination of the classification of the Board, the lack of cumulative voting and the supermajority voting
requirements will make it more difficult for the Company’s existing stockholders to replace the Board as well as for
another party to obtain control of the Company by replacing the Board. Because the Board has the power to retain and
discharge the Company’s officers, these provisions could also make it more difficult for existing stockholders or
another party to effect a change in management.
These provisions may have the effect of deterring hostile takeovers or delaying or preventing changes in control
of the Company or its management, such as a merger, reorganization or tender offer. These provisions are intended to
enhance the likelihood of continued stability in the composition of the Board and its policies and to discourage certain
types of transactions that may involve an actual or threatened acquisition of the Company. These provisions are
designed to reduce the Company’s vulnerability to an unsolicited acquisition proposal. The provisions are also
intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect
of discouraging others from making tender offers for the Company’s shares and, as a consequence, they also may
inhibit fluctuations in the market price of the Company’s shares that could result from actual or rumored takeover
attempts. Such provisions may also have the effect of preventing changes in management.
Dissenters’ Rights of Appraisal and Payment
Under the DGCL, with certain exceptions, the Company’s stockholders will have appraisal rights in connection
with a merger or consolidation of the Company. Pursuant to the DGCL, stockholders entitled to seek appraisal who
properly assert and perfect appraisal rights in accordance with Section 262 of the DGCL in connection with such
merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the
Court of Chancery of the State of Delaware.
Stockholders’ Derivative Actions
Under the DGCL, any of the Company’s stockholders may bring an action in the company’s name to procure a
judgment in its favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of
the Company’s shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter
devolved upon such stockholder by operation of law.
Corporate Opportunity
Delaware law permits a corporation to adopt provisions in its certificate of incorporation renouncing any interest
or expectancy in certain opportunities that are presented to the corporation or its officers or directors. The Company’s
amended and restated certificate of incorporation renounces, to the fullest extent permitted by applicable law, any
interest or expectancy that the Company has in, or right to be offered an opportunity to participate in, specified
business opportunities that are from time to time presented to the Company’s officers, directors or stockholders or their
respective affiliates, other than those officers, directors, stockholders or affiliates who are the Company’s or the
Company’s subsidiaries’ employees.
EXHIBIT 4.1
7
Limitations on Liability and Indemnification and Advancement of Expenses of Officers and Directors
The DGCL authorizes corporations to limit or eliminate the personal liability of directors and officers to
corporations and their stockholders for monetary damages for breaches of fiduciary duties, subject to certain
exceptions. The Company’s amended and restated certificate of incorporation includes a provision that eliminates the
personal liability of directors and officers for monetary damages to the corporation or its stockholders for any breach
of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not
permitted under the DGCL. The effect of these provisions is to eliminate the rights of the Company and its
stockholders, through stockholders’ derivative suits on the Company’s behalf, to recover monetary damages from a
director or officer for breach of fiduciary duty as a director or officer, including breaches resulting from grossly
negligent behavior. However, exculpation does not apply to any breaches of the director’s or officer’s duty of loyalty,
any acts or omissions not in good faith or that involve intentional misconduct or knowing violation of law, any
authorization of dividends or stock redemptions or repurchases paid or made in violation of the DGCL, or for any
transaction from which the director or officer derived an improper personal benefit.
The Company’s amended and restated bylaws generally provide that it must indemnify and advance expenses to
its directors and officers to the fullest extent authorized by the DGCL. The Company also is expressly authorized to
carry directors’ and officers’ liability insurance providing indemnification for its directors, officers and certain
employees for some liabilities. In addition, the Company has entered into indemnification agreements with its current
directors and officers and may enter into indemnification agreements with its future directors and officers. The
Company believes that these indemnification and advancement provisions and insurance are useful to attract and retain
qualified directors and executive officers.
The limitation of liability, indemnification and advancement provisions in the Company’s amended and restated
certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit
against directors and officers for breach of their fiduciary duty. These provisions also may have the effect of reducing
the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might
otherwise benefit the Company and its stockholders. In addition, your investment may be adversely affected to the
extent the Company pays the costs of settlement and damage awards against directors and officers pursuant to these
indemnification provisions.
There is currently no pending material litigation or proceeding involving any of the Company’s directors,
officers or employees for which indemnification or advancement of expenses is sought.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is Computershare Trust Company, N.A.
Listing
The common stock is listed on the Nasdaq Global Select Market under the symbol “CLMT.”
EXHIBIT 10.23
CALUMET, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
Calumet, Inc.
Executive Deferred Compensation Plan
(i)
TABLE OF CONTENTS
Page
ARTICLE I PREAMBLE AND PURPOSE
1
1.1
Preamble
1
1.2
Purpose
1
1.3
ERISA Status
1
ARTICLE II DEFINITIONS AND CONSTRUCTION
2
2.1
Definitions
2
2.2
Construction
7
ARTICLE III PARTICIPATION AND FORFEITABILITY OF BENEFITS
8
3.1
Eligibility and Participation
8
3.2
Forfeitability of Benefits
8
ARTICLE IV DEFERRAL, COMPANY CONTRIBUTIONS, DIVIDENDS, ACCOUNTING
9
4.1
General Rules Regarding Deferral Elections
9
4.2
Cash Incentive Award Deferrals
9
4.3
Company Contributions
9
4.4
Dividend Equivalent Rights
9
4.5
Accounting for Deferred Compensation
10
ARTICLE V VESTING AND DISTRIBUTION OF BENEFITS
11
5.1
Distribution Election
11
5.2
Termination Distributions to Key Employees
11
5.3
Scheduled In-Service Withdrawals
11
5.4
Unforeseeable Emergency
12
5.5
Accelerated Vesting and Distribution of Accounts
12
5.6
Termination of Employment Pursuant to a Termination for Cause or Voluntary Resignation
12
5.7
Relationship with the LTIP
12
5.8
Withholding
12
5.9
Impact of Reemployment on Benefits
13
ARTICLE VI PAYMENT LIMITATIONS
14
6.1
Spousal Claims
14
6.2
Legal Disability
15
6.3
Assignment
15
ARTICLE VII FUNDING
16
7.1
Funding
16
7.2
Creditor Status
16
ARTICLE VIII ADMINISTRATION
17
8.1
The Board
17
8.2
Powers of Board
17
8.3
Appointment of Plan Administrator
17
8.4
Duties of Plan Administrator
17
8.5
Indemnification of Board and Plan Administrator
18
8.6
Claims for Benefits
18
8.7
Receipt and Release of Necessary Information
19
8.8
Overpayment and Underpayment of Benefits
20
8.9
Clawback.
20
Calumet, Inc.
Executive Deferred Compensation Plan
(ii)
ARTICLE IX OTHER BENEFIT PLANS OF THE COMPANY
21
9.1
Other Plans
21
ARTICLE X AMENDMENT AND TERMINATION OF THE PLAN
22
10.1
Continuation
22
10.2
Amendment of Plan
22
10.3
Termination of Plan
22
10.4
Termination of Affiliate’s Participation
23
ARTICLE XI MISCELLANEOUS
24
11.1
No Reduction of Employer Rights
24
11.2
Provisions Binding
24
EXHIBIT A VESTING SCHEDULES
1
Calumet, Inc.
Executive Deferred Compensation Plan
1
CALUMET, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PREAMBLE AND PURPOSE
1.1
Preamble. The Calumet, Inc. Executive Deferred Compensation Plan (the “Plan”) has been adopted and
assumed by Calumet, Inc. (the “Company”), and is intended to permit the Company and its participating
Affiliates as defined herein (collectively, the “Employer”), to attract and retain a select group of management
or highly compensated Employees and Directors, as defined herein.
The Employer may adopt one or more trusts to serve as a possible source of funds for the payment of benefits
under this Plan.
The Plan was originally adopted by Calumet Specialty Products Partners, L.P., a Delaware limited partnership
(the “Partnership”). On July 10, 2024 (the “Effective Date”), simultaneously with the closing of the
transactions contemplated by that certain Conversion Agreement, dated as of February 9, 2024, by and among
the Partnership, Calumet GP, LLC, a Delaware limited liability corporation, the Company, and the other
parties thereto, the Company assumed the Plan.
1.2
Purpose. Through this Plan, the Employer intends to permit the deferral of compensation and to provide
additional benefits to Directors and a select group of management or highly compensated Employees of the
Employer. The Employer desires to accomplish these objectives by helping to provide for the retirement of
those Employees and Directors chosen to participate in the Plan.
1.3
ERISA Status. It is intended that this Plan will not constitute a “qualified plan” subject to the limitations of
section 401(a) of the Code, nor will it constitute a “funded plan” for purposes of such requirements. It also is
intended that this Plan will be exempt from the participation and vesting requirements of Part 2 of Title I of
ERISA, the funding requirements of Part 3 of Title I of ERISA, and the fiduciary requirements of Part 4 of
Title I of ERISA by reason of the exclusions afforded plans that are unfunded and maintained by an employer
primarily for the purpose of providing deferred compensation for a select group of management or highly
compensated employees.
_________________________
End of Article I
Calumet, Inc.
Executive Deferred Compensation Plan
2
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1
Definitions. When a word or phrase appears in this Plan with the initial letter capitalized, and the word or
phrase does not commence a sentence, the word or phrase will generally be a term defined in this Section 2.1.
The following words and phrases with the initial letter capitalized will have the meaning set forth in this
Section 2.1, unless a different meaning is required by the context in which the word or phrase is used.
(a)
“Account” means one or more of the bookkeeping accounts maintained by the Company or its agent
on behalf of a Participant, as described in more detail in Section 4.5.
(b)
“Affiliate” means an entity that is a member of a controlled group of entities (as defined in section
414(b) of the Code) that includes the Company, any trade or business (whether or not incorporated)
that is in common control (as defined in section 414(c) of the Code) with the Company, or any entity
that is a member of the same affiliated service group (as defined in section 414(m) of the Code) as
the Company.
(c)
“Alternate Payee” means any spouse, former spouse, child, or other dependent of a Participant who
is recognized by a DRO as having a right to receive all, or a portion of, the benefits payable under
the Plan with respect to such Participant.
(d)
“Beneficiary” means the person or persons designated by the Participant to receive a distribution of
the Participant’s benefits under the Plan upon the death of the Participant, on a beneficiary
designation form prescribed by the Plan Administrator and lastly filed with the Plan Administrator.
In the event that a Participant fails to designate a Beneficiary, or if the Participant’s Beneficiary does
not survive the Participant, the Participant’s Beneficiary will be the Participant’s surviving spouse, if
any, or if the Participant does not have a surviving spouse, the Participant’s estate. The term
“Beneficiary” also will mean a Participant’s spouse or former spouse who is entitled to all or a
portion of a Participant’s benefit pursuant to Section 6.1.
(e)
“Board” means the Board of Directors of the Company.
(f)
“Cash Incentive Award” means an annual cash incentive payment to a Participant pursuant to an
Employer Incentive Plan, an annual cash retainer payment to a Director, or any other cash incentive
payment designated by the Plan Administrator as an eligible cash incentive under the Plan.
(g)
“Cash Incentive Award Deferral” means the Cash Incentive Award deferral made by a Participant
pursuant to Section 4.2.
(h)
“Change of Control” shall have the meaning given that term in the LTIP as in effect on the Effective
Date; provided, however, that any modification to the definition of “change of control” in the LTIP
adopted after the Effective Date shall apply for purposes of this Plan, except that any modification to
such definition adopted on or after, or within 180 days prior to, a Change of Control shall not apply
in determining the definition of such term under this Plan unless such amendment is favorable to the
Participant; and provided further, however, that in the event any distribution due to a Participant
under this Plan would also constitute “deferred compensation” within the meaning of the Treasury
Regulation § 1.409A-1(b)(1), either by design or due to a subsequent modification in the terms of
such distribution or as a result in a change in the law occurring after the Effective Date, then to the
extent such distribution is not exempt from section 409A of the Code by an applicable exemption,
the term “Change of Control” shall mean an event that constitutes not only a Change of Control
event described in the LTIP, but also constitutes a “change in control” within the meaning of section
409A of the Code and any Internal Revenue Service guidance promulgated with respect to section
409A of the Code.
Calumet, Inc.
Executive Deferred Compensation Plan
3
(i)
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
(j)
“Company” means Calumet, Inc., a Delaware corporation.
(k)
“Compensation Committee” means the Compensation Committee of the Board.
(l)
“Director” means a member of the Board who is not an Employee.
(m)
“DER” means a dividend equivalent right, being a contingent right, granted in tandem with a
specific Restricted Stock Unit, to receive an amount in cash equal to the dividends that would have
been paid to a Participant if the Share underlying the Restricted Stock Unit with respect to which the
DER relates had been owned by such Participant during the period such Restricted Stock Unit is
outstanding; provided, however, that a DER will remain subject to the same vesting restrictions and
forfeiture provisions as the Restricted Stock Unit to which the DER relates.
(n)
“Disability” means (i) a Participant’s inability to engage in any substantial gainful activity by reason
of a medically determinable physical or mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months, or (ii) the Participant is,
by reason of a medically determinable physical or mental impairment that can be expected to result
in death or can be expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than 3 months under an accident and health plan
of the Employer.
(o)
“Discretionary Contribution” means the contribution made by the Employer on behalf of a
Participant as described in Section 4.3(b).
(p)
“DRO” means a domestic relations order that is a judgment, decree, or order (including one that
approves a property settlement agreement) that relates to the provision of child support, alimony
payments or marital property rights to a spouse, former spouse, child or other dependent of a
Participant and is rendered under a state (within the meaning of section 7701(a)(10) of the Code)
domestic relations law (including a community property law) and that:
(i)
Creates or recognizes the existence of an Alternate Payee’s right to, or assigns to an
Alternate Payee the right to receive all or a portion of the benefits payable with respect to a
Participant under the Plan;
(ii)
Does not require the Plan to provide any type or form of benefit, or any option, not
otherwise provided under the Plan;
(iii)
Does not require the Plan to provide increased benefits (determined on the basis of actuarial
value);
(iv)
Does not require the payment of benefits to an Alternate Payee that are required to be paid
to another Alternate Payee under another order previously determined to be a DRO; and
(v)
Clearly specifies: the name and last known mailing address of the Participant and of each
Alternate Payee covered by the DRO; the amount or percentage of the Participant’s benefits
to be paid by the Plan to each such Alternate Payee, or the manner in which such amount or
percentage is to be determined; the number of payments or payment periods to which such
order applies; and that it is applicable with respect to this Plan.
Calumet, Inc.
Executive Deferred Compensation Plan
4
(q)
“Election Form” means the written forms provided by the Plan Administrator pursuant to which the
Participant consents to participation in the Plan and makes elections with respect to deferrals. Such
Participant consent and elections may be done either in writing or on-line through an electronic
signature, as the Plan Administrator prescribes.
(r)
“Eligible Person” means an Employee that is eligible to receive a Cash Incentive Award under an
Employer Incentive Plan and designated as an Eligible Person by the Plan Administrator, as well as
any Director. As provided in Section 3.1, the Plan Administrator may at any time, in its sole and
absolute discretion, limit the classification of Employees who are eligible to participate in the Plan
for a Plan Year and/or may modify or terminate an Eligible Person’s participation in the Plan without
the need for an amendment to the Plan.
(s)
“Employee” means each select member of management or highly compensated employees receiving
remuneration, or who is entitled to remuneration, for services rendered to the Employer, in the legal
relationship of employer and employee.
(t)
“Employer” means, collectively, the Company and each Affiliate which has adopted the Plan as a
participating employer. An Affiliate may evidence its adoption of the Plan either by a formal action
of its governing body or by commencing deferrals and taking other administrative actions with
respect to this Plan on behalf of its employees. An entity will cease to be a participating employer as
of the date such entity ceases to be an Affiliate.
(u)
“Employer Incentive Plan” means a cash incentive arrangement or plan maintained by the
Employer.
(v)
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time.
(w)
“Fair Market Value” means the closing sales price of a Share on the principal national securities
exchange or other market in which trading in Shares occurs on the applicable date (or if there is no
trading in the Shares on the applicable date, on the next preceding date on which there was trading)
as reported in The Wall Street Journal (or other reporting service approved by the Plan
Administrator). If Shares are not traded on a national securities exchange or other market at the time
a determination of fair market value is required to be made hereunder, the determination of fair
market value shall be made in good faith by the Plan Administrator in such other manner as it may
deem appropriate, and, to the extent applicable, in compliance with the requirements of section 409A
of the Code.
(x)
“Five Percent Owner” means any person who owns (or is considered as owning within the meaning
of section 318 of the Code) more than five percent (5%) of the outstanding securities of the
Company or an Affiliate or securities possessing more than five percent (5%) of the total combined
voting power of all securities of the Company or an Affiliate. The rules of sections 414(b), (c) and
(m) of the Code will not apply for purposes of applying these ownership rules. Thus, this ownership
test will be applied separately with respect to the Company and each Affiliate.
(y)
“Key Employee” means, at any time in which the securities of any Employer are publicly traded on
an established securities market (within the meaning of Treasury Regulation § 1.409A-1, et seq.),
any Employee or former Employee (including any deceased Employee) who at any time during the
Plan Year was:
(i)
an officer of the Company or an Affiliate having compensation within the meaning of
section 415(c) of the Code of greater than the dollar amount set forth in section 416(i), as
adjusted under section 416(i)(1) of the Code (i.e., $220,000 in 2024);
Calumet, Inc.
Executive Deferred Compensation Plan
5
(ii)
a Five Percent Owner; or
(iii)
a One Percent Owner having compensation within the meaning of section 415(c) of the
Code of more than one hundred fifty thousand dollars ($150,000).
The determination of Key Employees will be based upon a twelve (12) month period ending on
December 31 of each year (i.e., the identification date). Employees that are Key Employees during
such twelve (12) month period will be treated as Key Employees for the twelve (12) month period
beginning on the first day of the fourth month following the end of the twelve (12) month period
(i.e., since the identification date is December 31, then the twelve (12) month period to which it
applies begins on the next following April 1).
The determination of who is a Key Employee will be made in accordance with sections 416(i) and
409A of the Code and other guidance of general applicability issued thereunder. For purposes of
determining whether an Employee or former Employee is an officer, a Five Percent Owner or a One
Percent Owner, the Company and each Affiliate will be treated as a separate employer (i.e., the
controlled group rules of sections 414(b), (c), (m) and (o) of the Code will not apply). Conversely,
for purposes of determining whether the adjusted dollar limit on compensation is met under the
officer test described in Section 2.1(y)(i), compensation from the Company and all Affiliates will be
taken into account (i.e., the controlled group rules of sections 414(b), (c), (m) and (o) of the Code
will apply). Further, in determining who is an officer under the officer test described in Section
2.1(y)(i), no more than fifty (50) employees of the Company or its Affiliates (i.e., the controlled
group rules of sections 414(b), (c), (m) and (o) of the Code will apply) will be treated as officers. If
the number of officers exceeds fifty (50), the determination of which Employees or former
Employees are officers will be determined based on who had the largest annual compensation from
the Company and Affiliates for the Plan Year.
(z)
“Long-Term Incentive Plan” or “LTIP” means the Calumet, Inc. Amended and Restated Long-Term
Incentive Plan.
(aa)
“Matching Contribution” means the contribution made by the Employer on behalf of a Participant
as described in Section 4.3(a).
(bb)
“Normal Retirement” means a Participant’s Termination of Employment with the Employer on or
after the date that the Participant reaches the age of 62.
(cc)
“One Percent Owner” means any person who would be described as a Five Percent Owner if “one
percent (1%)” were substituted for “five percent (5%)” each place where it appears therein.
(dd)
“Open Enrollment Period” means the period occurring each year during which an Eligible Person
may make such Eligible Person’s elections to defer such Eligible Person’s Cash Incentive Award for
a Plan Year pursuant to Article IV. Open Enrollment Periods will end no later than (i) December 31
of each Plan Year preceding the Plan Year in which the services will be performed with respect to the
Cash Incentive Award to be deferred, or (ii) with respect to a Cash Incentive Award that constitutes
“performance-based compensation” under section 409A of the Code, the date that is six months
before the end of the performance period, or, if earlier, the date prior to the date such compensation
has become readily ascertainable.
(ee)
“Participant” means each Eligible Person who has been designated for participation in this Plan and
each Employee or former Employee (or Director or former Director) whose participation in this Plan
has not terminated. Each such Participant who is currently employed by the Employer or serving as
a member of the Board will be referred to herein as an “Active Participant” and each such Employee
who is no longer employed by the Employer and each Director who is no longer
Calumet, Inc.
Executive Deferred Compensation Plan
6
serving as a member of the Board but has an Account balance under the Plan will be referred to
herein as an “Inactive Participant.”
(ff)
“Plan” means the Calumet, Inc. Amended and Restated Executive Deferred Compensation Plan as
set forth herein and as the same may be amended from time to time.
(gg)
“Plan Administrator” means the Compensation Committee, unless the Board appoints a different
individual, individuals or committee to handle the day-to-day administration of the Plan.
(hh)
“Plan Year” means the calendar year.
(ii)
“Restricted Stock Unit” means a contractual right granted under the LTIP that is denominated in
Shares, which, upon full vesting, entitles a Participant to receive a Share, an amount of cash equal to
the Fair Market Value of a Share, or some combination of Shares and cash, as determined at the
discretion of the Plan Administrator. Phantom Units granted prior to the Effective Date were
converted to Restricted Stock Units on the Effective Date.
(jj)
“Scheduled In-Service Withdrawal” means a distribution elected by the Participant for an in-service
withdrawal of amounts of Cash Incentive Award Deferrals, Matching Contributions or Discretionary
Contributions made in a given Plan Year, as set forth on the Election Form for such Plan Year.
(kk)
“Scheduled Withdrawal Date” means the distribution date elected by the Participant for a Scheduled
In-Service Withdrawal.
(ll)
“Share” means a share of common stock of the Company, $0.01 par value per share.
(mm)
“Special Enrollment Period” means the thirty (30) day period after an Employee is employed by the
Employer (or a Director is elected to the Board) and advised of such Employee’s eligibility to
participate in the Plan during which the Eligible Person may make elections to defer a Cash
Incentive Award earned after such election pursuant to Article IV. The Plan Administrator may also
designate certain periods as Special Enrollment Periods to the extent permitted under section 409A
of the Code.
(nn)
“Termination for Cause” shall mean a Termination of Employment due to an event constituting
“Cause” under a Participant’s employment agreement with the Employer, and in the event that no
employment agreements exists, for any of the following events: (1) commission of an act of fraud,
embezzlement, misappropriation, willful misconduct or breach of fiduciary duty against the
Employer or other conduct harmful or potentially harmful to the Employer’s best interest, as
reasonably determined by the Plan Administrator; (2) any conviction, plea of no contest or nolo
contendere, deferred adjudication or unadjudicated probation for any felony, or any crime involving
moral turpitude; or (3) continued failure to substantially perform Participant’s material obligations
and duties of employment with the Employer.
(oo)
“Termination of Employment” means (i) with respect to an Employee, the date that such Employee
ceases performing services for the Employer and its Affiliates in the capacity of an employee and (ii)
with respect to a Director, the date that such Director ceases to provide services to the Company as a
member of the Board; provided, however, that in each case such event constitutes a “separation from
service” within the meaning of Treasury Regulation § 1.409A-1(h). An Employee who transfers
employment between entities that are considered an “Employer” under this Plan, regardless of
whether such entity has adopted the Plan as a participating employer, will not incur a Termination of
Employment.
Calumet, Inc.
Executive Deferred Compensation Plan
7
(pp)
“Trustee” means the individual or entity appointed to serve as trustee of any trust established as a
possible source of funds for the payment of benefits under this Plan as provided in Section 7.1.
(qq)
“Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from (i)
an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary, or the
Participant’s dependent (as defined under section 152(a) of the Code), (ii) a loss of the Participant’s
property due to casualty, or (iii) any other similar extraordinary and unforeseeable loss arising from
events beyond the control of the Participant, as determined by the Plan Administrator in its sole and
absolute discretion and in accordance with the requirements of section 409A of the Code.
A distribution on account of Unforeseeable Emergency may be made only to the extent that the
Participant’s need cannot be met through insurance reimbursements, the liquidation of other assets
(but only if such liquidation would not itself cause a hardship), or by cessation of Cash Incentive
Award Deferrals under the Plan. The amount of the distribution cannot exceed the amount necessary
to meet the need (plus any taxes resulting from the distribution).
(rr)
“Voluntary Resignation” means a Participant’s voluntary Termination of Employment, other than
for Normal Retirement.
2.2
Construction. If any provision of this Plan is determined to be for any reason invalid or unenforceable, the
remaining provisions of this Plan will continue in full force and effect. All of the provisions of this Plan will
be construed and enforced in accordance with the laws of the State of Delaware and will be administered
according to the laws of such state, except as otherwise required by ERISA, the Code or other applicable
federal law. The term “delivered to the Plan Administrator,” as used in this Plan, will include delivery to a
person or persons designated by the Plan Administrator for the disbursement and the receipt of administrative
forms. Delivery will be deemed to have occurred only when the form or other communication is actually
received. Headings and subheadings are for the purpose of reference only and are not to be considered in the
construction of this Plan.
______________________
End of Article II
Calumet, Inc.
Executive Deferred Compensation Plan
8
ARTICLE III
PARTICIPATION AND FORFEITABILITY OF BENEFITS
3.1
Eligibility and Participation.
(a)
Determination of Eligibility. It is intended that eligibility to participate in the Plan will be limited
to Eligible Persons, as determined by the Plan Administrator, in its sole and absolute discretion.
During the Open Enrollment Period, each Eligible Person will be contacted in writing and informed
that the Eligible Person may elect to defer portions of the Eligible Person’s Cash Incentive Award
and will be provided with an Election Form and such other forms as the Plan Administrator will
determine. An Eligible Person will become a Participant by completing all required forms and
making a deferral election during an Open Enrollment Period pursuant to Section 4.1. Eligibility to
become a Participant for any Plan Year will not entitle an Eligible Person to continue as an Active
Participant for any subsequent Plan Year.
(b)
Limits on Eligibility. The Plan Administrator may at any time, in its sole and absolute discretion,
limit the classification of Employees eligible to participate in the Plan and/or may limit or terminate
an Eligible Person’s participation in the Plan.
An Employee who takes an Unforeseeable Emergency distribution pursuant to Section 5.4 of this
Plan will have the Employee’s Cash Incentive Award Deferral under this Plan suspended for the
remainder of the Plan Year in which such distribution occurs.
(c)
Eligibility on Initial Employment. If an Eligible Person is employed or elected to the Board during
the Plan Year and designated by the Plan Administrator to be a Participant for such year, such
Eligible Person may elect to participate in the Plan during the Special Enrollment Period for the
remainder of such Plan Year, by completing all required forms under Section 4.1 and making a Cash
Incentive Award Deferral election pursuant to Section 4.2. Designation as a Participant for the Plan
Year in which the Participant is employed or elected to the Board will not entitle the Eligible Person
to continue as an Active Participant for any subsequent Plan Year.
(d)
Loss of Eligibility Status. A Participant under this Plan who separates from employment with the
Employer, or who ceases to be a Director, will continue as an Inactive Participant under this Plan
until the Participant has received payment of all amounts payable to the Participant under this Plan.
In the event that an Eligible Person ceases active participation in the Plan because the Eligible
Person is no longer described as a Participant pursuant to this Section 3.1, or because the Eligible
Person ceases making deferrals of Cash Incentive Awards, the Eligible Person will continue as an
Inactive Participant under this Plan until the Eligible Person has received payment of all amounts
payable to the Eligible Person under this Plan.
3.2
Forfeitability of Benefits. Except as provided in Section 6.1, a Participant will at all times have a
nonforfeitable right to all amounts credited to the Participant’s Account pursuant to Section 4.2. Amounts
credited to a Participant’s Account pursuant to Section 4.3 shall be nonforfeitable in accordance with the
vesting schedule, if any, imposed on such amounts in accordance with Section 4.3. As provided in Section
7.2, however, each Participant will be only a general creditor of the Company and/or the Participant’s
Employer with respect to the payment of any benefit under this Plan.
_____________________
End or Article III
Calumet, Inc.
Executive Deferred Compensation Plan
9
ARTICLE IV
DEFERRAL, COMPANY CONTRIBUTIONS, DIVIDENDS, ACCOUNTING
4.1
General Rules Regarding Deferral Elections. An Eligible Person may become a Participant in the Plan for
the applicable Plan Year by electing during the Open Enrollment Period to defer the Eligible Person’s Cash
Incentive Award pursuant to the terms of this Section 4.1 on an Election Form. Such Election Form will be
submitted to the Plan Administrator by the date specified by the Plan Administrator and will be effective with
respect to any Cash Incentive Award the Participant earns beginning January 1 of the Plan Year immediately
following the Plan Year in which the Election Form was properly submitted or, in the case of a mid-year
deferral election with respect to “performance-based compensation” under section 409A of the Code, with
respect to any Cash Incentive Award the Participant earns beginning January 1 of the Plan Year in which (or if
different, the start date of the applicable performance period for which) such Election Form was submitted.
In the case of an Eligible Person who is newly employed or elected to the Board during the Plan Year, the
Election Form will be entered into within the Special Enrollment Period and submitted to the Plan
Administrator by the date specified by the Plan Administrator and the specified deferral elections will only be
effective with respect to a Cash Incentive Award earned after the date such Election Form is received by the
Plan Administrator.
A Participant’s Election Form will only be effective with respect to a single Plan Year and will be irrevocable
for the duration of such Plan Year, except as provided in Sections 2.1(jj), 5.4, 6.1 and 10.3. Deferral elections
for each applicable Plan Year of participation will be made during the Open Enrollment Period pursuant to
new Election Forms.
4.2
Cash Incentive Award Deferrals. Each Eligible Person may elect to defer a designated full percentage of
the Eligible Person’s Cash Incentive Award to the Plan, up to a maximum percentage of one hundred percent
(100%) of the Employee’s Cash Incentive Award for the applicable Plan Year, in increments specified on the
Participant’s Election Form. The deferred Cash Incentive Award amount will be used to track Restricted
Stock Units credited to the Participant’s Account. A Participant shall at all times be 100% vested in the
Restricted Stock Units tracked with a Cash Incentive Award Deferral amount.
4.3
Company Contributions.
(a)
Matching Contribution. The Employer may elect to make a Matching Contribution to the Plan in
any Plan Year with respect to all or any portion of the Cash Incentive Award Deferral on behalf of all
or some of the Participants for such Plan Year. Any Matching Contribution credited by the
Employer to the Participant’s Account will be in the form of Restricted Stock Units. Restricted
Stock Units credited to the Participant’s Account through Matching Contributions may be subject to
a vesting schedule established by the Plan Administrator and set forth on Exhibit A.
(b)
Discretionary Contribution. The Employer may elect to make a Discretionary Contribution to a
Participant’s Account in such amount, and at such time, as will be determined by the Board. Any
Discretionary Contribution credited by the Employer will be in the form of Restricted Stock Units.
Restricted Stock Units credited to the Participant’s Account through Discretionary Contributions
may be subject to a vesting schedule established by the Plan Administrator and set forth on Exhibit
A.
4.4
Dividend Equivalent Rights. Restricted Stock Units credited to a Participant’s Account will receive DERs,
and such DERs will be credited to the Participant’s Account in the form of additional Restricted Stock Units.
Restricted Stock Units credited to a Participant’s Account pursuant to a Participant’s DERs will carry the
same vesting period imposed on the original Restricted Stock Units such DERs relate to, and will be
distributed at the same time that the original Restricted Stock Units to which such DERs relate are distributed
to the Participant.
Calumet, Inc.
Executive Deferred Compensation Plan
10
4.5
Accounting for Deferred Compensation.
(a)
Restricted Stock Units. The number of Restricted Stock Units to be credited to a Participant’s
Account pursuant to the Participant’s Cash Incentive Award Deferral or DERs credited to the
Participant’s Account will be the quotient obtained by dividing (i) the amount of the Cash Incentive
Award Deferral, or the aggregate amount of DERs, as applicable, by (ii) the Fair Market Value of
one Share on the day of the deferral or the crediting of the DERs, as applicable.
(b)
Accounts. The Company may, in its sole and absolute discretion, establish and maintain an Account
for each Participant under this Plan. Each Account will be adjusted at least quarterly to reflect the
Fair Market Value of the Restricted Stock Units credited thereto, and any distributions that may have
been made pursuant to Article V. The Restricted Stock Units directly tracked pursuant to a Cash
Incentive Award Deferral amount will be credited to the Participant’s Account on the same date on
which such related Cash Incentive Award would have been paid to the Participant had the Participant
not elected to defer such amount pursuant to the terms and provisions of the Plan. Any Restricted
Stock Units directly credited to the Participant’s Account pursuant to a Matching Contribution or a
Discretionary Contribution will be credited to each Participant’s Account at such times as
determined by the Board. Restricted Stock Units credited to a Participant’s Account pursuant to a
DER will be credited to each Participant’s Account on the same day the DER would have been
distributed to the Participant had the DER not been credited to the Participant’s Account in the form
of a Restricted Stock Unit. In the sole and absolute discretion of the Plan Administrator, more than
one Account may be established for each Participant to facilitate record-keeping convenience and
accuracy. Each such Account will be credited and adjusted as provided in this Plan.
(c)
Accounts Held in Trust. Amounts credited to Participants’ Accounts may be secured by one or
more trusts, as provided in Section 7.1, but will be subject to the claims of the general creditors of
each such Participant’s Employer. Although the assets of such trust will be separate and apart from
other funds of the Employer and will be used for the purposes set forth therein, neither the
Participants nor their Beneficiaries will have any preferred claim on, or any beneficial ownership in,
any assets of the trust prior to the time such assets are paid to the Participants or Beneficiaries, as
benefits and all rights created under this Plan will be unsecured contractual rights of Plan
Participants and Beneficiaries against the Employer. Any assets held in the trust with respect to a
Participant will be subject to the claims of the general creditors of that Participant’s Employer under
federal and state law in the event of insolvency. The assets of any trust established pursuant to this
Plan will never inure to the benefit of the Employer and the same will be held for the exclusive
purpose of providing benefits to that Employer’s Participants and their beneficiaries.
_____________________
End of Article IV
Calumet, Inc.
Executive Deferred Compensation Plan
11
ARTICLE V
VESTING AND DISTRIBUTION OF BENEFITS
5.1
Distribution Election. At the time an Eligible Person first becomes a Participant in the Plan (i.e., elects to
make Cash Incentive Award Deferrals or is awarded a Discretionary Contribution under the Plan), such
Participant must elect the time in which such Participant’s vested Account balance will be distributed, other
than pursuant to the distribution of a Participant’s Accounts pursuant to Sections 5.5 or 5.6. A Participant’s
distribution election will be irrevocable and will apply to all deferrals and contributions made with respect to
that Participant under the Plan for the applicable Plan Year to which the election applies.
(a)
Time of Distribution. A Participant may, subject to the six (6) month and one (1) day delay
applicable to Key Employees in Section 5.2, elect to receive a distribution of such Participant’s
vested Plan Account upon such Participant’s:
(i)
Termination of Employment; or
(ii)
Scheduled Withdrawal Date, or such Participant’s Termination of Employment, if sooner.
(b)
Manner of Distribution. The Plan Administrator, in its sole discretion, shall distribute a
Participant’s Account balance in Shares, cash, or any combination of Shares and cash; provided,
however, that no fractional Shares will be distributed to any Participant. In the event that the Plan
Administrator determines to distribute a Participant’s Account wholly or partially in Shares, any
fractional Share will be paid instead in cash.
(c)
Failure to Elect Distribution. In the event that a Participant fails to elect the time in which the
Participant’s Account balance will be paid upon the Participant’s Termination of Employment, such
Account balance will be distributed as soon as practicable following the Participant’s Termination of
Employment, but in no event later than the 60th day following the Participant’s Termination of
Employment (subject to the six (6) month and one (1) day delay applicable to Key Employees
described in Section 5.2).
(d)
Taxation of Distributions. All distributions from the Plan will be taxable as ordinary income when
received and subject to appropriate withholding of income taxes.
5.2
Termination Distributions to Key Employees. In the event that a Participant is also a Key Employee on the
date of the Participant’s Termination of Employment and a distribution of the Participant’s Account is to
occur on account of a Termination of Employment, such payment will be delayed, unless otherwise payable
without the imposition of penalty taxes pursuant to section 409A of the Code, for a period of six (6) months
and one (1) day following such Participant’s Termination of Employment. This six (6) month and one (1) day
restriction will not apply, or will cease to apply, with respect to a distribution to a Participant’s Beneficiary by
reason of the death of the Participant. For the avoidance of doubt, DERs shall continue to be credited to the
Participant’s Account during the six (6) month and one (1) day delay period.
5.3
Scheduled In-Service Withdrawals. A Participant who elects a Scheduled In-Service Withdrawal pursuant
to Section 5.1 may, with the Employer’s permission, subsequently elect to delay such distribution for a period
of at least five (5) additional calendar years; provided, however, that such election is made at least (12) twelve
months prior to the date that such distribution would otherwise be made. Further, in the event that a
Participant elects a Scheduled In-Service Withdrawal and incurs a Termination of Employment prior to the
Scheduled Withdrawal Date, the Participant’s Scheduled In-Service Withdrawal election and Cash Incentive
Award Deferral election under Section 4.2, Section 4.3 or Section 4.4, respectively, will be cancelled and the
Participant’s entire vested Account balance will be distributed upon the Participant’s Termination of
Employment.
Calumet, Inc.
Executive Deferred Compensation Plan
12
5.4
Unforeseeable Emergency. Upon application by the Participant, the Plan Administrator, in its sole and
absolute discretion, may direct payment of all or a portion of the Participant’s Account balance prior to the
Participant’s Termination of Employment and any Scheduled Withdrawal Date in the event of an
Unforeseeable Emergency. Any such application will set forth the circumstances constituting such
Unforeseeable Emergency. The Plan Administrator will determine whether to grant an application for a
distribution on account of an Unforeseeable Emergency in accordance with guidance issued pursuant to
section 409A of the Code. Specifically, the amount distributable on account of an Unforeseeable Emergency
must be limited to the amount reasonably necessary to satisfy the need (plus any taxes resulting from the
distribution). A distribution on account of an Unforeseeable Emergency may be made only to the extent that
the Participant’s need cannot be met through insurance reimbursements, the liquidation of other assets (but
only if such liquidation would not itself cause a hardship), or by cessation of Cash Incentive Award Deferrals
under the Plan. However, the determination of an Unforeseeable Emergency is not required to take into
account additional compensation that could be paid to the Participant, but which has not actually been paid,
under any other nonqualified deferred compensation plan in which the Participant participates.
A Participant who takes an Unforeseeable Emergency distribution pursuant to this Section 5.4 will have the
Participant’s Cash Incentive Award Deferrals (and related Matching Contributions) under this Plan suspended
for the remainder of the Plan Year in which such Unforeseeable Emergency distribution occurs.
5.5
Accelerated Vesting and Distribution of Accounts. Notwithstanding the Participant’s distribution election
pursuant to Section 5.1 above, in the event that any of the following events occur while a Participant is
employed by the Employer, all vesting restrictions on a Participant’s Restricted Stock Units will lapse and all
Restricted Stock Units will be deemed 100% vested, and an automatic distribution of the Participant’s
Account will occur as soon as practicable, but in no event later than the 60th day following the date of the
event (unless otherwise subject to the Key Employee delay period described in Section 5.2):
(a)
Change of Control.
(b)
Participant’s Death or Disability. The six (6) month and one (1) day restriction on distributions to
Key Employees under Section 5.2 will not apply in the event of a Participant’s death.
In the event a terminated Participant dies before receiving a full distribution of the Participant’s
Account, the remaining Account balance will be distributed to the Participant’s Beneficiary within
(60) days following the date of the Participant’s death.
(c)
Participant’s Normal Retirement.
5.6
Termination of Employment Pursuant to a Termination for Cause or Voluntary Resignation. If a
Participant has a Termination of Employment pursuant to a Termination for Cause or a Voluntary Resignation,
the Participant’s Account will be considered vested only to the extent vested on the Participant’s Termination
of Employment.
5.7
Relationship with the LTIP. In the event that the Plan Administrator determines to distribute a Participant’s
Account or any portion of a Participant’s Account in Shares, such Shares will be distributed upon the
approval of the Company’s Board (or the Compensation Committee) and pursuant to the LTIP. The Shares
will also be subject to any additional restrictions imposed on Shares pursuant to the LTIP.
5.8
Withholding. Any taxes or other legally required withholdings any distributions to Participants or
Beneficiaries under the Plan will be deducted and withheld by the Employer, benefit provider or funding
agent as required pursuant to applicable law. A Participant or Beneficiary will be provided with a tax
withholding election form for purposes of federal and state tax withholding, if applicable.
Calumet, Inc.
Executive Deferred Compensation Plan
13
5.9
Impact of Reemployment on Benefits. If a Participant incurs a Termination of Employment and is
scheduled to receive payments from the Plan and such Participant is reemployed by the Employer, then such
Participant’s payments will commence as scheduled during the period of the Participant’s reemployment. A
Participant will not automatically be eligible to participate in the Plan upon the Participant’s reemployment,
such eligibility to be determined at the discretion of the Plan Administrator.
_____________________
End of Article V
Calumet, Inc.
Executive Deferred Compensation Plan
14
ARTICLE VI
PAYMENT LIMITATIONS
6.1
Spousal Claims.
(a)
In the event that an Alternate Payee is entitled to all or a portion of a Participant’s Accounts pursuant
to the terms of a DRO, such Alternate Payee will have the following distribution rights with respect
to such Participant’s Account to the extent set forth pursuant to the terms of the DRO:
(i)
payment of benefits in a lump sum in cash or Shares as soon as practicable following the
acceptance of the DRO by the Plan Administrator;
(ii)
payment of benefits in a lump sum in cash or Shares in the first January following, or in the
second January following, but not later than the second January following, the acceptance
of the DRO by the Plan Administrator;
(iii)
payment of benefits in substantially equal annual or monthly installments over a period of
not less than one (1) nor more than fifteen (15) years from the date the DRO is accepted by
the Plan Administrator, but only if the Alternate Payee has an Account balance in excess of
one hundred thousand dollars ($100,000);
(iv)
payment of benefits in substantially equal annual or monthly installments over a period of
not less than one (1) nor more than fifteen (15) years beginning the first January following,
or the second January following, the date the DRO is accepted by the Plan Administrator,
but only if the Alternate Payee has an Account balance in excess of one hundred thousand
dollars ($100,000);
(v)
payment of benefits in substantially equal annual installments over a period of not less than
one (1) nor more than fifteen (15) years from the date the DRO is accepted by the Plan
Administrator, but only if the Alternate Payee has an Account balance in excess of ten
thousand dollars ($10,000) and less than one hundred thousand dollars ($100,000); and
(vi)
payment of benefits in substantially equal annual installments over a period of not less than
one (1) nor more than fifteen (15) years beginning the first January following, or the second
January following, the date the DRO is accepted by the Plan Administrator, but only if the
Alternate Payee has an Account balance in excess of ten thousand dollars ($10,000) and
less than one hundred thousand dollars ($100,000).
Installments will be made on a monthly or annual basis, as determined above.
An Alternate Payee with respect to a DRO that provides for any of the distributions described in
subsections (ii), (iii), (iv), (v) or (vi) above, must complete and deliver to the Plan Administrator all
required forms within thirty (30) days from the date the Alternate Payee is notified by the Plan
Administrator that the DRO has been accepted. Any Alternate Payee who does not complete and
deliver to the Plan Administrator all required forms and/or whose DRO does not provide for any of
the distributions described in subsections (ii), (iii), (iv), (v) or (vi) above will receive the Alternate
Payee’s benefits in a lump sum according to subsection (i) above.
(b)
Any taxes or other legally required withholdings from payments to such Alternate Payee will be
deducted and withheld by the Employer, benefit provider or funding agent. The Alternate Payee will
be provided with a tax withholding election form for purposes of federal and state tax withholding, if
applicable.
Calumet, Inc.
Executive Deferred Compensation Plan
15
(c)
The Plan Administrator will have sole and absolute discretion to determine whether a judgment,
decree or order is a DRO, to determine whether a DRO will be accepted for purposes of this Section
6.1 and to make interpretations under this Section 6.1, including determining who is to receive
benefits, all calculations of benefits and determinations of the form of such benefits, and the amount
of taxes to be withheld. The decisions of the Plan Administrator will be binding on all parties with
an interest.
(d)
Any benefits payable to an Alternate Payee pursuant to the terms of a DRO will be subject to all
provisions and restrictions of the Plan and any dispute regarding such benefits will be resolved
pursuant to the Plan claims procedure in Article VIII.
6.2
Legal Disability. If a person entitled to any payment under this Plan is, in the sole judgment of the Plan
Administrator, under a legal disability, or otherwise is unable to apply such payment to such person’s own
interest and advantage, the Plan Administrator, in the exercise of its discretion, may direct the Employer or
payor of the benefit to make any such payment in any one or more of the following ways:
(a)
Directly to such person;
(b)
To such person’s legal guardian or conservator; or
(c)
To such person’s spouse or to any person charged with the duty of such person’s support, to be
expended for such person’s benefit and/or that of such person’s dependents.
The decision of the Plan Administrator will in each case be final and binding upon all persons in interest,
unless the Plan Administrator reverses its decision due to changed circumstances.
6.3
Assignment. Except as provided in Section 6.1, no Participant or Beneficiary will have any right to assign,
pledge, transfer, convey, hypothecate, anticipate or in any way create a lien on any amounts payable under
this Plan. No amounts payable under this Plan will be subject to assignment or transfer or otherwise be
alienable, either by voluntary or involuntary act, or by operation of law, or subject to attachment, execution,
garnishment, sequestration or other seizure under any legal, equitable or other process, or be liable in any way
for the debts or defaults of Participants and their Beneficiaries.
______________________
End of Article VI
Calumet, Inc.
Executive Deferred Compensation Plan
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ARTICLE VII
FUNDING
7.1
Funding. Benefits under this Plan will be funded solely by the Employer. Benefits under this Plan will
constitute an unfunded general obligation of the Employer, but the Employer may create reserves, funds
and/or provide for amounts to be held in trust to fund such benefits on its behalf. Payment of benefits may be
made by the Employer, any trust established by the Employer or through a service or benefit provider to the
Employer or such trust.
7.2
Creditor Status. Participants and their Beneficiaries will be general unsecured creditors of their respective
Employer with respect to the payment of any benefit under this Plan, unless such benefits are provided under
a contract of insurance or an annuity contract that has been delivered to Participants, in which case
Participants and their Beneficiaries will look to the insurance carrier or annuity provider for payment, and not
to the Employer. The Employer’s obligation for such benefit will be discharged by the purchase and delivery
of such annuity or insurance contract.
____________________
End of Article VII
Calumet, Inc.
Executive Deferred Compensation Plan
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ARTICLE VIII
ADMINISTRATION
8.1
The Board. The overall administration of the Plan will be the responsibility of the Board, or any entity,
committee or individual(s) the Board may delegate the responsibility of administering the Plan.
8.2
Powers of Board. The Board will have sole and absolute discretion regarding the exercise of its powers and
duties under this Plan. In order to effectuate the purposes of the Plan, the Board will have the following
powers and duties:
(a)
To appoint a Plan Administrator.
(b)
To review and render decisions respecting a denial of a claim for benefits under the Plan;
(c)
To construe the Plan and to make equitable adjustments for any mistakes or errors made in the
administration of the Plan; and
(d)
To determine and resolve, in its sole and absolute discretion, all questions relating to the
administration of the Plan and any trust established to secure the assets of the Plan (i) when
differences of opinion arise between the Company, an Affiliate, the Plan Administrator, the Trustee,
a Participant, or any of them, and (ii) whenever it is deemed advisable to determine such questions in
order to promote the uniform and nondiscriminatory administration of the Plan for the greatest
benefit of all parties concerned.
The foregoing list of express powers is not intended to be either complete or conclusive, and the Board will,
in addition, have such powers as it may reasonably determine to be necessary or appropriate in the
performance of its powers and duties under the Plan.
8.3
Appointment of Plan Administrator. The Board may appoint Plan Administrator other than the Board, who
will have the responsibility and duty to administer the Plan on a daily basis. The Board may delegate all or
some of its powers under the Plan to the Plan Administrator. The Board may remove the Plan Administrator
with or without cause at any time. The Plan Administrator may resign upon written notice to the Board.
8.4
Duties of Plan Administrator. The Plan Administrator will have sole and absolute discretion regarding the
exercise of its powers and duties under this Plan. The Plan Administrator will have the following powers and
duties:
(a)
To direct the administration of the Plan in accordance with the provisions herein set forth;
(b)
To adopt rules of procedure and regulations necessary for the administration of the Plan, provided
such rules are not inconsistent with the terms of the Plan;
(c)
To determine all questions with regard to rights of Employees, Participants, and Beneficiaries under
the Plan including, but not limited to, questions involving eligibility of an Employee to participate in
the Plan and the value of a Participant’s Accounts;
(d)
To enforce the terms of the Plan and any rules and regulations adopted by the Board;
(e)
To review and render decisions respecting a claim for a benefit under the Plan;
(f)
To furnish the Employer with information that the Employer may require for tax or other purposes;
Calumet, Inc.
Executive Deferred Compensation Plan
18
(g)
To engage the service of counsel (who may, if appropriate, be counsel for the Employer), actuaries,
and agents whom it may deem advisable to assist it with the performance of its duties;
(h)
To prescribe procedures to be followed by Participants in obtaining benefits;
(i)
To receive from the Employer and from Participants such information as is necessary for the proper
administration of the Plan;
(j)
To establish and maintain, or cause to be maintained, the individual Accounts described in Section
4.5;
(k)
To create and maintain such records and forms as are required for the efficient administration of the
Plan;
(l)
To make all determinations and computations concerning the benefits, credits and debits to which
any Participant, or other Beneficiary, is entitled under the Plan;
(m)
To give the Trustee of any trust established to serve as a source of funds under the Plan specific
directions in writing with respect to:
(i)
making distribution payments, giving the names of the payees, specifying the amounts to be
paid and the time or times when payments will be made; and
(ii)
making any other payments which the Trustee is not by the terms of the trust agreement
authorized to make without a direction in writing by the Plan Administrator;
(n)
To comply with all applicable lawful reporting and disclosure requirements of ERISA;
(o)
To comply (or transfer responsibility for compliance to the Trustee) with all applicable federal
income tax withholding requirements for benefit distributions; and
(p)
To construe the Plan, in its sole and absolute discretion, and make equitable adjustments for any
errors made in the administration of the Plan. The foregoing list of express duties is not intended to
be either complete or conclusive, and the Plan Administrator will, in addition, exercise such other
powers and perform such other duties as it may deem necessary, desirable, advisable or proper for
the supervision and administration of the Plan.
8.5
Indemnification of Board and Plan Administrator. To the extent not covered by insurance, or if there is a
failure to provide full insurance coverage for any reason, and to the extent permissible under corporate by-
laws and other applicable laws and regulations, the Employer agrees to hold harmless and indemnify the
Board and Plan Administrator against any and all claims and causes of action by or on behalf of any and all
parties whomsoever, and all losses therefrom, including, without limitation, costs of defense and reasonable
attorneys’ fees, based upon or arising out of any act or omission relating to or in connection with the Plan
other than losses resulting from the Board’s, or any such person’s commission of fraud or willful misconduct.
8.6
Claims for Benefits.
(a)
Initial Claim. In the event that an Employee, Eligible Person, Participant or Beneficiary thereof
claims to be eligible for benefits, or claims any rights under this Plan, such claimant must complete
and submit such claim forms and supporting documentation as will be required by the Plan
Administrator, in its sole and absolute discretion. Likewise, any Participant or Beneficiary who feels
unfairly treated as a result of the administration of the Plan, must file a written claim, setting forth
the basis of the claim, with the Plan Administrator. In connection with the
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determination of a claim, or in connection with review of a denied claim, the claimant may examine
this Plan, and any other pertinent documents generally available to Participants that are specifically
related to the claim.
A written notice of the disposition of any such claim will be furnished to the claimant within ninety
(90) days after the claim is filed with the Plan Administrator. Such notice will refer, if appropriate,
to pertinent provisions of this Plan, will set forth in writing the reasons for denial of the claim if a
claim is denied (including references to any pertinent provisions of this Plan) and, where appropriate,
will describe any additional material or information necessary for the claimant to perfect the claim
and an explanation of why such material or information is necessary. If the claim is denied, in whole
or in part, the claimant will also be notified of the Plan’s claim review procedure and the time limits
applicable to such procedure, including the claimant’s right to bring a civil action under section
502(a) of ERISA following an adverse benefit determination on review as provided below. All
benefits provided in this Plan as a result of the disposition of a claim will be paid as soon as
practicable following receipt of proof of entitlement, if requested.
(b)
Request for Review. Within ninety (90) days after receiving written notice of the Plan
Administrator’s disposition of the claim, the claimant may file with the Board a written request for
review of the claimant’s claim. In connection with the request for review, the claimant will be
entitled to be represented by counsel and will be given, upon request and free of charge, reasonable
access to all pertinent documents for the preparation of the claimant’s claim. If the claimant does not
file a written request for review within ninety (90) days after receiving written notice of the Plan
Administrator’s disposition of the claim, the claimant will be deemed to have accepted the Plan
Administrator’s written disposition, unless the claimant was physically or mentally incapacitated so
as to be unable to request review within the ninety (90) day period.
(c)
Decision on Review. After receipt by the Board of a written application for review of the claimant’s
claim, the Board will review the claim taking into account all comments, documents, records and
other information submitted by the claimant regarding the claim without regard to whether such
information was considered in the initial benefit determination. The Board will notify the claimant
of its decision by delivery or by certified or registered mail to the claimant’s last known address. A
decision on review of the claim will be made by the Board at its next meeting following receipt of
the written request for review. If no meeting of the Board is scheduled within forty-five (45) days of
receipt of the written request for review, then the Board will hold a special meeting to review such
written request for review within such forty-five (45) day period. If special circumstances require an
extension of the forty-five (45) day period, the Board will so notify the claimant and a decision will
be rendered within ninety (90) days of receipt of the request for review. In any event, if a claim is
not determined by the Board within ninety (90) days of receipt of written submission for review, it
will be deemed to be denied.
The decision of the Board will be provided to the claimant as soon as possible but no later than five
(5) days after the benefit determination is made. The decision will be in writing and will include the
specific reasons for the decision presented in a manner calculated to be understood by the claimant
and will contain references to all relevant Plan provisions on which the decision was based. Such
decision will also advise the claimant that the claimant may receive upon request, and free of charge,
reasonable access to and copies of all documents, records and other information relevant to the
claimant’s claim and will inform the claimant of the claimant’s right to bring a civil action under
section 502(a) of ERISA in the case of an adverse decision regarding the claimant’s appeal. The
decision of the Board will be final and conclusive.
8.7
Receipt and Release of Necessary Information. In implementing the terms of this Plan, the Plan
Administrator may, without the consent of or notice to any person, release to or obtain from any other
insuring entity or other organization or person any information, with respect to any person, which the Plan
Administrator deems to be necessary for such purposes. Any Participant or Beneficiary claiming benefits
Calumet, Inc.
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under this Plan will furnish to the Plan Administrator such information as may be necessary to determine
eligibility for and amount of benefit, as a condition of claiming and receiving such benefit.
8.8
Overpayment and Underpayment of Benefits. The Plan Administrator may adopt, in its sole and absolute
discretion, whatever rules, procedures and accounting practices are appropriate in providing for the collection
of any overpayment of benefits. If a Participant or Beneficiary receives an underpayment of benefits, the Plan
Administrator will direct that payment be made as soon as practicable to make up for the underpayment. If an
overpayment is made to a Participant or Beneficiary, for whatever reason, the Plan Administrator may, in its
sole and absolute discretion, withhold payment of any further benefits under the Plan until the overpayment
has been collected or may require repayment of benefits paid under this Plan without regard to further
benefits to which the Participant or Beneficiary may be entitled.
8.9
Clawback. To the extent required by applicable law or any applicable securities exchange listing standards
(including, without limitation, Section 10D of the Securities Exchange Act of 1934, as amended, and any
rules promulgated thereunder), or as otherwise determined by the Plan Administrator, amounts paid or
payable pursuant to this Plan shall be subject to the provisions of any applicable clawback policies or
procedures adopted by the Company, which clawback policies or procedures may provide for forfeiture,
repurchase and/or recoupment of amounts paid or payable under this Plan. Notwithstanding any provision of
the Plan to the contrary, the Company reserves the right, without the consent of any Participant or
Beneficiary, to adopt any such clawback policies and procedures, including such policies and procedures
applicable to the Plan with retroactive effect.
_____________________
End of Article VIII
Calumet, Inc.
Executive Deferred Compensation Plan
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ARTICLE IX
OTHER BENEFIT PLANS OF THE COMPANY
9.1
Other Plans. Nothing contained in this Plan will prevent a Participant prior to such Participant’s death, or a
Participant’s spouse or other Beneficiary after such Participant’s death, from receiving, in addition to any
payments provided for under this Plan, any payments provided for under any other plan or benefit program of
the Employer, or which would otherwise be payable or distributable to such Participant, such Participant’s
surviving spouse or Beneficiary under any plan or policy of the Employer or otherwise. Nothing in this Plan
will be construed as preventing the Company or any of its Affiliates from establishing any other or different
plans providing for current or deferred compensation for Employees and/or Directors. Unless otherwise
specifically provided in any plan of the Company intended to “qualify” under section 401 of the Code, Cash
Incentive Award Deferrals made under this Plan will constitute earnings or compensation for purposes of
determining contributions or benefits under such qualified plan.
_____________________
End of Article IX
Calumet, Inc.
Executive Deferred Compensation Plan
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ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
10.1
Continuation. The Company intends to continue this Plan indefinitely, but nevertheless assumes no
contractual obligation beyond the promise to pay the benefits described in this Plan.
10.2
Amendment of Plan. The Company, through an action of the Board, reserves the right in its sole and
absolute discretion to amend this Plan in any respect at any time. No amendment may adversely impact the
amount of benefits a Participant has accrued under the Plan at such time except to the extent required by
applicable law.
10.3
Termination of Plan. The Company, through an action of the Board, may terminate or suspend this Plan in
whole or in part at any time, provided that no such termination or suspension will deprive a Participant, or
person claiming benefits under this Plan through a Participant, of any amount credited to a Participant’s
Accounts under this Plan up to the date of suspension or termination, except as required by applicable law and
pursuant to the valuation of such Accounts pursuant to Section 4.5. Notwithstanding any provision of this
Plan to the contrary, upon the complete termination of the Plan, the Board, in its sole and absolute discretion,
may direct that the Plan Administrator treat each Participant as having incurred a Termination of Employment
and to commence the distribution of each such Participant’s Account to such Participant or such Participant’s
Beneficiary, as applicable, in the form elected (or deemed elected) by such Participant pursuant to Section 5.1
(or in the form required by section 409A of the Code) to the extent that the commencement of such
distribution will not violate section 409A of the Code.
The Plan may be terminated and liquidated under the following circumstances:
(a)
Corporate Dissolution or Bankruptcy. The Board may terminate and liquidate the Plan within
twelve (12) months of a corporate dissolution taxed under section 331 of the Code or with the
approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A), provided that the amounts
deferred under the Plan are included in Participants’ gross incomes in the latest of the following
years (or if earlier, the taxable year in which the amount is actually or constructively received):
(i)
The calendar year in which the Plan termination and liquidation occurs.
(ii)
The first calendar year in which the amount is no longer subject to a substantial risk of
forfeiture.
(iii)
The first calendar year in which the payment is administratively practicable.
(b)
Change in Control. The Board may terminate and liquidate the Plan within the thirty (30) days
preceding or the twelve (12) months following a change in control event, as defined in Treasury
Regulation § 1.409A-3(i)(5)), provided that all plans or arrangements that would be aggregated with
the Plan under section 409A of the Code are also terminated and liquidated with respect to each
Participant that experienced the change in control event so that under the terms of the Plan and all
such arrangements the Participant is required to receive all amounts of compensation deferred under
such arrangements within twelve (12) months of the termination of the Plan or arrangement, as
applicable. In the case of a change of control event which constitutes a sale of assets, the
termination of the Plan pursuant to this Section 11.2(b) may be made with respect to the Employer
that is primarily liable immediately after the change of control transaction for the payment of
benefits under the Plan.
(c)
Termination of Plan. The Board may terminate and liquidate the Plan provided that (i) the
termination and liquidation does not occur by reason of a downturn of the financial health of the
Company or an Employer, (ii) all plans or arrangements that would be aggregated with the Plan
under section 409A of the Code are also terminated and liquidated, (iii) no payments in liquidation
Calumet, Inc.
Executive Deferred Compensation Plan
23
of the Plan are made within twelve (12) months of the date of termination of the Plan other than
payments that would be made in the ordinary course operation of the Plan, (iv) all payments are
made within twenty-four (24) months of the date the Plan is terminated and (v) the Company or the
Employer, as applicable depending on whether the Plan is terminated with respect to such entity, do
not adopt a new plan that would be aggregated with the Plan within three (3) years of the date of the
termination of the Plan.
10.4
Termination of Affiliate’s Participation. An Affiliate may terminate its participation in the Plan at any time
by an action of its governing body and providing written notice to the Company. Likewise, the Company
may terminate an Affiliate’s participation in the Plan at any time by an action of the Board and providing
written notice to the Affiliate. The effective date of any such termination will be the later of the date specified
in the notice of the termination of participation or the date on which the Plan Administrator can
administratively implement such termination. In the event that an Affiliate’s participation in the Plan is
terminated, each Participant employed by such Affiliate will continue to participate in the Plan as an Inactive
Participant and will be entitled to a distribution of such Participant’s entire Account or a portion thereof upon
the earlier of such Participant’s Scheduled Withdrawal Date, if any, or such Participant’s Termination of
Employment, in the form elected (or deemed elected) by such Participant pursuant to Section 5.1.
_____________________
End of Article X
Calumet, Inc.
Executive Deferred Compensation Plan
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ARTICLE XI
MISCELLANEOUS
11.1
No Reduction of Employer Rights. Nothing contained in this Plan will be construed as a contract of
employment between the Employer and an Employee, or as a right of any Employee to continue in the
employment of the Employer, or as a limitation of the right of the Employer to discharge any of its
Employees, with or without cause or as a right of any Director to be renominated to serve as a Director.
11.2
Provisions Binding. All of the provisions of this Plan will be binding upon all persons who will be entitled
to any benefit hereunder, their heirs and personal representatives.
_____________________
End of Article XI
Calumet, Inc.
Executive Deferred Compensation Plan
1
1
VESTING SCHEDULES
1.
Vesting Schedule for Restricted Stock Units credited to a Participant’s Account pursuant to Matching
Contributions:
Years Held
Percentage Vested
Less than one year
0%
At least one year but less than two years
25%
At least two years but less than three years
50%
At least three years but less than four years
75%
At least four years
100%
2.
Vesting Schedule for Restricted Stock Units credited to a Participant’s Account pursuant to Discretionary
Contributions:
Years Held
Percentage Vested
Less than one year
0%
At least one year but less than two years
25%
At least two years but less than three years
50%
At least three years but less than four years
75%
At least four years
100%
1
This Exhibit A may be updated from time to time without the need for a formal amendment to the Plan, upon
approval by the Board.
Exhibit 10.33
SEVENTH AMENDMENT
TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT
AGREEMENT (this “Seventh Amendment”) is dated as of January 6, 2025 and is executed by and
among CALUMET, INC., a Delaware corporation (“Parent”), the Subsidiaries of Parent listed as
“Borrowers” on the signature pages hereto (together with Parent, collectively, “Borrowers” and each
individually a “Borrower”), the Lenders party hereto and BANK OF AMERICA, N.A., a national
banking association, as agent for the Lenders (“Agent”).
R E C I T A L S:
A.
Borrowers, Guarantors (if any), Lenders and Agent are parties to that certain Third
Amended and Restated Credit Agreement dated as of February 23, 2018 (as amended by that certain
First Amendment to Third Amended and Restated Credit Agreement dated as of September 4, 2019,
Consent and Amendment No. 2 to Third Amended and Restated Credit Agreement dated as of
November 18, 2021, Third Amendment to Third Amended and Restated Credit Agreement dated as of
January 20, 2022, Fourth Amendment to Third Amended and Restated Credit Agreement dated as of
January 17, 2024, Fifth Amendment to Third Amended and Restated Credit Agreement, dated as of
July 10, 2024, and Consent and Sixth Amendment to Third Amended and Restated Credit Agreement,
dated as of September 30, 2024, and as further amended or otherwise modified from time to time, the
“Credit Agreement”; capitalized terms used in this Seventh Amendment not otherwise defined herein
shall have the respective meanings given thereto in the Credit Agreement).
B.
The Borrowers have requested to amend the Credit Agreement to make certain changes
as agreed between the Borrowers, the Agent and the Lenders.
C.
The Lenders party hereto, the Borrower and the Agent have agreed to amend the Credit
Agreement, on the terms and conditions contained in this Seventh Amendment.
NOW, THEREFORE, in consideration of the premises and further valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Amendment. Effective as of the Seventh Amendment Effective Date, the parties
hereto further agree to amend the Credit Agreement as follows:
(i)
The following defined terms shall be added to Section 1.1 of the Credit
Agreement:
“Seventh Amendment” – that certain Seventh Amendment to Third Amended
and Restated Credit Agreement dated as of January 6, 2025, among Parent,
CSPP, the Subsidiaries of Parent listed as Borrowers on the signature pages
thereto, the Lenders party thereto and Agent.
“Seventh Amendment Effective Date”— the “Seventh Amendment Effective
Date” as defined in the Seventh Amendment.
2
(ii)
Section 9.2.2 of the Credit Agreement is hereby amended by (a) deleting the
word “and” at the end of clause (l) thereof, (b) adding the word “and” at the
end of clause (m) thereof and (c) adding a new clause (n) after clause (m) as
follows:
“(n) additional Investments in Montana Renewables Holdings LLC, a Delaware
limited liability company, not to exceed $170,000,000 in an aggregate amount
at any time outstanding in connection with the U.S. Department of Energy’s
loan guarantee to Montana Renewables, LLC, a Delaware limited liability
company (“MRL”), to fund the construction and expansion of a renewable fuels
facility owned by MRL;”
2.
Effectiveness; Conditions Precedent.
(a)
This Seventh Amendment shall be effective only upon the satisfaction of each
of the following conditions precedent (the date of satisfaction, the “Seventh
Amendment Effective Date”):
(i)
Agent’s receipt of executed counterparts of this Seventh Amendment
executed by all Borrowers, all Guarantors (if any), Agent and the
Required Lenders;
(ii)
The representations and warranties in Section 3(a) and Section 3(b)
shall be true and correct as of the Seventh Amendment Effective Date
and Agent shall have received a certificate or certificates executed by a
Senior Officer of each Borrower or MLP General Partner as of the
Seventh Amendment Effective Date, in form and substance satisfactory
to Agent, stating that such conditions hereof are satisfied;
(iii)
Borrowers shall have paid all reasonable out-of-pocket costs and
expenses of Agent (including the reasonable fees and expenses of
counsel for Agent) to the extent that the Borrower Agent has received
an invoice therefor at least two Business Days prior to the Seventh
Amendment Effective Date (without prejudice to any post-closing
settlement of such fees, costs and expenses to the extent not so
invoiced); and
(iv)
Agent shall have received such documentation and other information as
has been reasonably requested by Agent in connection with this Seventh
Amendment and the transactions contemplated hereby.
3.
Representations and Warranties. In order to induce Agent and Lenders to enter into
this Seventh Amendment, each of the Obligors represents and warrants to Agent and Lenders as
follows:
(a)
all representations and warranties relating to such Obligor contained in the
Credit Agreement or any other Credit Document are true and correct as of the date hereof as if
made again on and as of the date hereof (except to the extent that such representations and
3
warranties were expressly limited to another specific date, in which case they are true and
correct as of such specific date);
(b)
both immediately prior to and immediately after giving effect to this Seventh
Amendment, no Default or Event of Default exists;
(c)
such Obligor has all requisite corporate or other organizational power and
authority (as applicable) to execute and deliver this Seventh Amendment;
(d)
the execution, delivery and performance of this Seventh Amendment and the
consummation of the transactions contemplated hereby have been duly authorized by all
necessary corporate or other organizational action, do not require the approval, consent,
exemption, authorization or other action by, or notice to or filing with, any Governmental
Authority or any other Person in order to be effective and enforceable, and do not and will not
violate or result in any breach or contravention of any Senior Notes Indenture or other
material Contractual Obligation, including the Senior Secured Notes Agreements, to which
such Obligor is a party or subject, any Organization Document of such Obligor or any
Applicable Law;
(e)
this Seventh Amendment has been duly executed and delivered on behalf of
each Borrower party hereto; and
(f)
this Seventh Amendment constitutes a legal, valid and binding obligation of
each Borrower party hereto, enforceable against it in accordance with its terms except as
enforceability may be limited by an applicable Insolvency Proceeding and by general
equitable principles (whether enforcement is sought by proceedings in equity or at law).
4.
Reaffirmation. By its execution hereof, each Obligor expressly (a) consents hereto,
(b) confirms and agrees that, notwithstanding the effectiveness of this Seventh Amendment, each
Credit Document to which it is a party is, and the obligations of such Obligor contained in the Credit
Agreement, if any, or in any other Credit Documents to which it is a party (in each case, as amended
and modified by this Seventh Amendment), are and shall continue to be, in full force and effect and
are hereby ratified and confirmed in all respects, (c) affirms that each of the Liens and security
interests granted by such Obligor in or pursuant to the Credit Documents are valid and subsisting and
(d) agrees that this Seventh Amendment shall in no manner impair or otherwise adversely affect any
of the Liens and security interests granted in or pursuant to the Credit Documents.
5.
Entire Agreement. This Seventh Amendment, the Credit Agreement, and the other
Credit Documents (collectively, the “Relevant Documents”), set forth the entire understanding and
agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior
negotiations and agreements among the parties relating to such subject matter. No promise, condition,
representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any
party hereto, and no such party has relied on any such promise, condition, representation or warranty.
Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant
Documents, no representations, warranties or commitments, express or implied, have been made by
any party to any other party in relation to the subject matter hereof or thereof. None of the terms or
conditions of this Seventh Amendment may be changed, modified, waived or canceled orally or
otherwise, except in writing and in accordance with Section 13.1 of the Credit Agreement.
4
6.
Full Force and Effect of Credit Agreement. This Seventh Amendment is a Credit
Document. Except as expressly consented hereto, all terms and provisions of the Credit Agreement
and all other Credit Documents remain in full force and effect and nothing contained in this Seventh
Amendment shall in any way impair the validity or enforceability of the Credit Agreement or the
Credit Documents, or alter, waive, annul, vary, affect, or impair any provisions, conditions, or
covenants contained therein or any rights, powers, or remedies granted therein.
7.
Counterparts. This Seventh Amendment may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. Delivery of a signature page of this
Seventh Amendment by telecopy or other electronic means shall be effective as delivery of a
manually executed counterpart of such agreement. Any electronic signature, contract formation on an
electronic platform and electronic record-keeping shall have the same legal effect, validity and
enforceability as a manually executed signature or use of a paper-based recordkeeping system to the
fullest extent permitted by Applicable Law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act, or any similar
state law based on the Uniform Electronic Transactions Act.
8.
Governing Law; Jurisdiction; Waiver of Jury Trial. THIS SEVENTH
AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION
(WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF
OR RELATING TO THIS SEVENTH AMENDMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Sections 13.13, 13.14 and
13.15 of the Credit Agreement are hereby incorporated herein by this reference.
9.
Severability. If any provision of this Seventh Amendment is held to be illegal, invalid
or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this
Seventh Amendment and the other Credit Documents shall not be affected or impaired thereby and
(b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable
provisions with legal, valid and enforceable provisions the economic effect of which comes as close
as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in
a particular jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.
10.
References. All references to the “Credit Agreement” in the Credit Documents shall
mean the Credit Agreement after giving effect to this Seventh Amendment.
11.
Successors and Assigns. This Seventh Amendment shall be binding upon and inure to
the benefit of Obligors, Agent and Secured Parties and their respective successors and assigns, except
that (a) no Obligor shall have the right to assign its rights or delegate its obligations under any Credit
Documents, and (b) any assignment by a Lender must be made in compliance with Section 12.3 of the
Credit Agreement.
[Signature pages follow.]
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Seventh Amendment to be
made, executed and delivered by their duly authorized officers as of the day and year first above
written.
BORROWERS:
CALUMET, INC.
By:
/s/ David Lunin
Name: David Lunin
Title: Executive Vice President and Chief Financial Officer
CALUMET GP, LLC
By: Calumet, Inc., its sole member
By:
/s/ David Lunin
Name: David Lunin
Title: Executive Vice President and Chief Financial Officer
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
By: Calumet GP, LLC, its general partner
By:
/s/ David Lunin
Name: David Lunin
Title: Executive Vice President and Chief Financial Officer
CALUMET OPERATING, LLC
By: Calumet Specialty Products Partners, L.P., its sole member
By: Calumet GP, LLC, its general partner
By:
/s/ David Lunin
Name: David Lunin
Title: Executive Vice President and
Chief Financial Officer
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
CALUMET FINANCE CORP.
By:
/s/ David Lunin
Name: David Lunin
Title:
Executive Vice President and Chief Financial Officer
CALUMET INTERNATIONAL, INC.
By: /s/ David Lunin
Name: David Lunin
Title:
Executive Vice President and Chief Financial Officer
KURLIN COMPANY, LLC
By: Calumet International, Inc., its sole member
By: /s/ David Lunin
Name: David Lunin
Title: Executive Vice President and Chief Financial Officer
CALUMET BRANDED PRODUCTS, LLC
By: Calumet Operating, LLC, its sole member
By: Calumet Specialty Products Partners, L.P., its sole
member
By: Calumet GP, LLC, its general partner
By:
/s/ David Lunin
Name: David Lunin
Title: Executive Vice President and
Chief Financial Officer
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BEL-RAY COMPANY, LLC
By: Calumet Branded Products, LLC, its sole member
By: Calumet Operating, LLC, its sole member
By: Calumet Specialty Products Partners, L.P., its sole
member
By:
Calumet GP, LLC, its general partner
By:
/s/ David Lunin
Name: David Lunin
Title:
Executive Vice President and
Chief Financial Officer
CALUMET REFINING, LLC
By: Calumet Operating, LLC, its sole member
By: Calumet Specialty Products Partners, L.P., its sole
member
By: Calumet GP, LLC, its general partner
By:
/s/ David Lunin
Name: David Lunin
Title: Executive Vice President and
Chief Financial Officer
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
CALUMET PRINCETON REFINING, LLC
CALUMET COTTON VALLEY REFINING, LLC
CALUMET SHREVEPORT REFINING, LLC
CALUMET MONTANA REFINING, LLC
CALUMET MISSOURI, LLC
CALUMET KARNS CITY REFINING, LLC
CALUMET DICKINSON REFINING, LLC
By: Calumet Refining, LLC, their sole member
By: Calumet Operating, LLC, its sole member
By: Calumet Specialty Products Partners, L.P., its sole
member
By:
Calumet GP, LLC, its general partner
By:
/s/ David Lunin
Name: David Lunin
Title:
Executive Vice President and
Chief Financial Officer
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
AGENT AND LENDERS:
BANK OF AMERICA, N.A.,
as Agent, a Lender and an Issuing Bank
By:
/s/ Mark Porter
Name: Mark Porter
Title:
Senior Vice President
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
`
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as a Lender
By:
/s/ Barry Felker
Name: Barry Felker
Title:
Authorized Signatory
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
JPMORGAN CHASE BANK, N.A.,
as a Lender
By:
/s/ Justin Carter
Name: Justin Carter
Title:
Vice President
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
REGIONS BANK,
as a Lender
By:
/s/ Darius Sutrinaitis
Name: Darius Sutrinaitis
Title:
Managing Director
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BMO HARRIS BANK, N.A.,
as a Lender
By:
/s/ Patrick Roy
Name: Patrick Roy
Title:
Vice President
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BARCLAYS BANK PLC,
as a Lender
By:
/s/ Sydney G. Dennis
Name: Sydney G. Dennis
Title:
Director
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
MORGAN STANLEY SENIOR FUNDING, INC.,
as a Lender
By:
/s/ Aaron McLean
Name: Aaron McLean
Title:
Vice President
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By:
/s/ Rod Swenson
Name: Rod Swenson
Title:
Senior Vice President
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
REGIONS BANK,
as a Lender
By:
/s/ Darius Sutrinaitis
Name: Darius Sutrinaitis
Title:
Managing Director
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:
/s/ Andrew Salmon
Name: Andrew Salmon
Title:
Vice President
EXHIBIT 19.1
CALUMET, INC.
Insider Trading Policy
(Dated July 10, 2024)
This Insider Trading Policy (the “Policy”) provides guidelines to employees, officers and
directors of Calumet, Inc. (the “Company”) with respect to transactions in the Company’s
securities. You should read this Policy carefully, ask questions of the Company’s General Counsel,
if you have any, and promptly sign and return the attached Certification acknowledging receipt
hereof to:
Calumet, Inc.
2780 Waterfront Pkwy E. Drive, Suite 200
Indianapolis, Indiana 46214
Attention: Greg Morical
(317) 328-5660
I.
APPLICABILITY OF POLICY
This Policy applies to all transactions in the Company’s securities, including shares of
common stock, options for shares and any other securities the Company may issue from time to
time, such as preferred stock, warrants and convertible debentures, as well as to derivative
securities relating to the Company’s common stock, whether or not issued by the Company, such as
exchange-traded options. This Policy applies to (1) all officers of the Company and all members of
the Company’s Board of Directors (the “Board”); (2) all employees of the Company and its
subsidiaries; and (3) with respect to any such director, officer or employee, any (a) partnership in
which he or she is a general partner, (b) trust or estate to which he or she is a trustee or executor, (c)
other equivalent legal entity he or she controls (such entities in (a), (b) and (c), “Controlled
Entities”), and (d) family members who reside with such director, officer or employee (including a
spouse, a child, stepchildren, grandchildren, parents, stepparents, grandparents, siblings and in-
laws), and any family members who do not live in his or her household but whose transactions in
the Company’s securities are directed or approved by such director, officer or employee
(collectively referred to as “Family Members”). The Company may also determine that other
persons should be subject to this Policy, such as contractors or consultants who have access to
Material Nonpublic Information (as defined in Section VIII below). The people and entities to
which this Policy applies are sometimes referred to in this Policy as “Insiders.”
The Company reserves the right to amend or rescind this Policy or any portion of it at any
time and to adopt different policies and procedures at any time. This Policy must be strictly followed.
II. INTRODUCTION
It is generally illegal for any person, either personally or on behalf of others, to trade in
securities on the basis of Material Nonpublic Information. It is also generally illegal to
communicate (or “tip”) Material Nonpublic Information to others who may trade in securities on
the basis of that information. These illegal activities are commonly referred to as “Insider Trading.”
2
III.STATEMENT OF GENERAL POLICY
This Policy prohibits you from trading or tipping others who may trade in the securities of
the Company when you know Material Nonpublic Information about the Company. You are also
prohibited from trading or tipping others who may trade in the securities of another company if you
learn Material Nonpublic Information in connection with your employment or position at the
Company that reasonably could be considered relevant to an investment decision in the other
company. In addition, it is the policy of the Company that no director, officer or other employee of
the Company (or any other person designated as subject to this Policy) who, in the course of
working for the Company, learns of Material Nonpublic Information about a company (1) with
which the Company does business, such as the Company’s distributors, vendors, customers and
suppliers, or (2) that is involved in a potential transaction or business relationship with Company,
may engage in transactions in that company’s securities until the information becomes public or is
no longer material.
IV. SPECIFIC POLICIES
A. Trading on Material Nonpublic Information
No director, officer or employee of the Company, nor any Family Member or Controlled
Entity, shall engage in any transaction involving the Company’s securities when he or she
possesses Material Nonpublic Information concerning the Company, and ending at the beginning
of the third Trading Day (as defined below) following the date of public disclosure of that
information, or at such time as such nonpublic information is no longer material. For purposes of
this Policy, references to “trading” or “transactions” involving the Company’s securities include
purchases and sales of the Company’s securities in public markets; sales of the Company’s
securities obtained through the exercise of stock options granted under the Company’s Amended
and Restated Long-Term Incentive Plan (the “LTIP”), including broker-assisted cashless exercises;
the exercise of stock options granted under the Company’s LTIP, unless the exercise is for cash or
net share settlement (although that still requires pre-clearance, if applicable); making gifts of the
Company’s securities (including charitable donations); and using the Company’s securities to
secure a loan. As used herein, the term “Trading Day” shall mean a day on which the Nasdaq
Stock Market is open for trading. A Trading Day begins at the time trading begins on such day. If
an Insider is aware of Material Nonpublic Information when his or her employment or service
relationship with the Company terminates, the Insider may not trade in the Company’s securities
until that information has become public or is no longer material.
B. Tipping
No Insider shall disclose or tip, either directly or indirectly, Material Nonpublic
Information to any other person where such information may be used by such person to his or her
profit by trading in the securities of companies to which such information relates, nor shall such
Insider make recommendations, either directly or indirectly, or express opinions on the basis of
Material Nonpublic Information as to trading in the Company’s securities. This policy against
“tipping” applies to information about the Company and its securities, as well as to information
about other companies.
3
C. Confidentiality of Nonpublic Information
All nonpublic information relating to the Company is the property of the Company and the
unauthorized disclosure of such information is forbidden. In the event any director, officer or
employee of the Company receives any inquiry from outside the Company, such as a stock analyst,
for information (particularly financial results and/or projections) that may be Material Nonpublic
Information, the inquiry should be referred to the Company’s Chief Financial Officer, who is
responsible for coordinating and overseeing the release of such information to the investing public,
analysts and others in compliance with applicable laws and regulations.
V.
POTENTIAL CRIMINAL AND CIVIL LIABILITY AND/OR DISCIPLINARY
ACTION
A. Liability for Insider Trading
Insiders may be subject to penalties of up to $5,000,000 and up to 20 years in jail for
engaging in transactions in the Company’s securities at a time when they have knowledge of
Material Nonpublic Information regarding the Company.
B. Liability for Tipping
Insiders may also be liable for improper transactions by any person (commonly referred to
as a “tippee”) to whom they have disclosed Material Nonpublic Information regarding the
Company or to whom they have made recommendations or expressed opinions on the basis of such
information as to trading in the Company’s securities. The Securities and Exchange Commission
(the “SEC”) has imposed large penalties even when the disclosing person did not profit from the
trading. The SEC, the stock exchanges and the National Association of Securities Dealers, Inc.
use sophisticated electronic surveillance techniques to uncover Insider Trading.
C. Possible Disciplinary Actions
Employees of the Company who violate this Policy shall also be subject to disciplinary
action by the Company, which may include ineligibility for future participation in the Company’s
equity incentive plans or termination of employment.
VI.TRADING GUIDELINES AND REQUIREMENTS
A. Blackout Period and Trading Window
All directors, officers and certain other employees identified by the Company and who have
been notified that they have been so identified (as well as respective Family Members and
Controlled Entities of such persons) are prohibited from trading during any period other than one
of the four “trading windows” during each fiscal year. Each trading window starts on the third
Trading Day after the Company issues its press release for annual or quarterly financial results and
remains open until the end of the day on the 14th calendar day prior to the end of each quarter. For
example, if the Company releases its first quarter financial results prior to the opening of trading
on the Nasdaq Stock Market on May 2nd, the trading window opens and you may start trading on
May 4th. You may continue to make otherwise authorized trades up to and including June 16th in
4
the example. Continuing with the example, the “blackout period” would begin on June 17th and
continue until the third Trading Day after the Company issues its press release announcing
quarterly financial results.
The prohibition against trading during the blackout period encompasses the fulfillment of
“limit orders” by any broker for a director, officer or other identified person, and the brokers with
whom any such limit order is placed must be so instructed at the time it is placed.
From time to time, the Company may also prohibit directors, officers and certain other
identified persons from trading securities of the Company because of developments known to the
Company and not yet disclosed to the public. In such event, such persons may not engage in any
transaction involving the purchase or sale of the Company’s securities during such period and
should not disclose to others the fact of such suspension of trading.
It should be noted that even during the trading window, any person possessing Material
Nonpublic Information concerning the Company should not engage in any transactions in the
Company’s securities until such information has been known publicly for at least two Trading
Days, whether or not the Company has recommended a suspension of trading to that person.
Trading in the Company’s securities during the trading window should not be considered a “safe
harbor,” and all directors, officers and other persons should use good judgment at all times.
B. Preclearance of Trades
The Company has determined that all officers and directors of the Company and certain
other persons identified by the Company from time to time (as well as respective Family Members
and Controlled Entities of such persons) must refrain from trading in the Company’s securities,
even during the trading window, without first complying with the Company’s “preclearance”
process. Each such person should contact the Company’s General Counsel prior to commencing
any trade in the Company’s securities. The General Counsel will consult as necessary with senior
management of the Company before clearing any proposed trade.
All requests must be submitted to the General Counsel prior to the proposed transaction.
The General Counsel will then determine whether the transaction may proceed. This preclearance
policy applies even if the individual is initiating a transaction while a trading window is open.
If a transaction is approved under the preclearance policy, the transaction must be executed
that day or the next Trading Day after the approval is obtained, but regardless may not be executed
if you acquire Material Nonpublic Information concerning the Company during that time. If a
transaction is not completed within the period described above, the transaction must be approved
again before it may be executed.
If a proposed transaction is not approved under the preclearance policy, you should refrain
from initiating any transaction in the Company’s securities, and you should not inform anyone
within or outside of the Company of the restriction.
In addition, when a request for pre-clearance is made, the requestor should carefully
consider whether he or she may be aware of any Material Nonpublic Information about the
Company, and should describe fully those circumstances to the General Counsel.
5
C. Individual Responsibility
Every director, officer and employee has the individual responsibility to comply with this
Policy. An Insider may, from time to time, have to forego a proposed transaction in the Company’s
securities even if he or she planned to make the transaction before learning of the Material
Nonpublic Information and even though the Insider believes he or she may suffer an economic loss
or forego anticipated profit by waiting.
VII. APPLICABILITY OF POLICY TO INSIDE INFORMATION REGARDING OTHER
COMPANIES
This Policy and the guidelines described herein also apply to Material Nonpublic
Information relating to other companies, including the Company’s customers, vendors, suppliers,
joint venture partners or prospective parties to acquisitions or divestitures (“business partners”),
when that information is obtained in the course of employment with, or other services performed
on behalf of, the Company. Civil and criminal penalties, and termination of employment may
result from trading on inside information regarding the Company’s business partners. All directors,
officers and employees should treat Material Nonpublic Information about the Company’s business
partners with the same care required with respect to information related directly to the Company.
VIII. DEFINITION OF MATERIAL NONPUBLIC INFORMATION
A. What information is “Material”?
It is not possible to define all categories of material information. However, information
should be regarded as “material” if there is a reasonable likelihood that it would be considered
important to an investor in making an investment decision regarding the purchase or sale of the
Company’s securities. Information that is likely to affect the price of a company’s securities is
almost always material.
While it may be difficult under this standard to determine whether particular information is
material, there are various categories of information that are particularly sensitive and, as a general
rule, should always be considered material. Examples of such information may include:
●
Unpublished financial results
●
Unpublished projections of future earnings or losses
●
Significant regulatory changes or developments
●
News of a pending or proposed merger
●
News of the disposition of a subsidiary or significant assets
●
Acquisitions or significant capital projects
●
Impending bankruptcy or financial liquidity problems
6
●
Gain or loss of a substantial customer or supplier
●
Changes in dividend policy
●
New product announcements of a significant nature
●
Significant product defects or modifications
●
Significant pricing changes
●
New equity or debt offerings
●
Significant litigation exposure due to actual or threatened litigation
●
Major changes in senior management
●
Significant actual or potential cybersecurity incidents
●
Major environmental incidents
The above list is for illustration purposes only. Either positive or negative information may
be material.
B. What information is “Nonpublic”?
“Nonpublic information” is information that has not been previously disclosed to the
general public and is otherwise not available to the general public. In order for information to be
considered “public,” it must be widely disseminated in a manner making it generally available to the
investing public (e.g., by means of a press release or a widely disseminated statement from a senior
officer or a filing with SEC) and the investing public must have had time to absorb the information
fully.
IX.CERTAIN EXCEPTIONS
For the purposes of the Policy, the Company considers that the exercise (if any) of stock
options for cash or as part of net share settlement under the Company’s LTIP (but not the sale of
any shares issued upon such exercise) is exempt from this Policy (although subject to pre-clearance
still), since the other party to the transaction is the Company itself and the price does not vary with
the market but is fixed by the terms of the option agreement or the plan.
Additionally, this Policy does not apply to the vesting and settlement of restricted stock,
restricted stock units or phantom units, or the exercise of a tax withholding right pursuant to which
you elect to have the Company withhold shares to satisfy tax withholding requirements upon the
vesting and settlement of restricted stock, restricted stock units or phantom units. The Policy does
apply, however, to any market sale of shares issued upon vesting.
7
X. COMPANY TRANSACTIONS
From time to time, the Company may engage in transactions in the Company’s securities. It
is the Company’s policy to comply with all applicable securities and state laws (including
appropriate approvals by the Board or appropriate committee, if required) when engaging in
transactions in the Company’s securities.
XI.PLANNED TRADING PROGRAMS
Rule 10b5-1 (“Rule 10b5-1”) under the Securities Exchange Act of 1934 (the “Exchange
Act”) provides an affirmative defense to an allegation that a trade has been made on the basis of
Material Nonpublic Information. Specifically, a purchase or sale will not be deemed to be made on
the basis of Material Nonpublic Information and, therefore, will not violate the insider trading
laws, if the trade is made pursuant to a trading plan that complies with the conditions in Rule
10b5-1 (a “Rule 10b5-1 Plan”).
Rule 10b5-1 Plans are designed to provide flexibility to those who would like to plan
securities transactions in advance at a time when they are not aware of Material Nonpublic
Information, and then carry out those pre-planned transactions at a later time, even if they later
become aware of Material Nonpublic Information after the Rule 10b5-1 Plan is implemented but
before the trade is executed.
Accordingly, it will not be a violation of this Policy to execute trades in the Company’s
securities while you possess Material Nonpublic Information if the trade is made pursuant to a
Rule 10b5-1 Plan that complies with the requirements set forth in “Appendix A: Guidelines for
Rule 10b5-1 Plans.” All Rule 10b5-1 Plans are required to be reviewed and approved by the
General Counsel prior to implementing any such Rule 10b5-1 Plan. In addition, all amendments,
modifications and terminations of an existing Rule 10b5-1 Plan must be reviewed and approved by
the General Counsel prior to effecting any such amendments, modifications or terminations. As
such, if you wish to implement a Rule 10b5-1 Plan, you must first pre-clear the plan with the
General Counsel prior to the entry into the plan.
If you are subject to Section 16 of the Exchange Act (“Section 16”), please note that
trading pursuant to a planned trading program is not an exemption from short-swing liability under
Section 16.
XII.
ADDITIONAL INFORMATION – DIRECTORS AND OFFICERS
Directors and officers, as defined in Rule 16a-1(f) under the Exchange Act,1 of the
Company must also comply with the reporting obligations and limitations on short-swing
transactions set forth in Section 16. The practical effect of these provisions is that officers and
directors who purchase and sell the Company’s securities within a six-month period must disgorge
all profits to the Company whether or not they had knowledge of any Material Nonpublic
Information. Under these provisions, and so long as certain other criteria are met, neither the receipt
of an option pursuant to the Company’s LTIP (nor the exercise of that option) nor the receipt of
1 The Board has made a determination as to which persons constitute “executive officers” for this purpose and has
communicated that determination to such executive officers.
8
shares under the Company’s LTIP, is deemed a purchase under Section 16; however, the sale of any
such shares is a sale under Section 16. Moreover, Section 16 prohibits officers and directors from
ever making a short sale of the Company’s securities. A short sale is sale of securities not owned by
the seller or, if owned, not delivered (a “short sale against the box”). Transactions in put and call
options for the Company’s securities may in some instances constitute a short sale or may
otherwise result in liability for short swing profits. All executive officers and directors of the
Company must confer with the General Counsel before effecting any such transaction. The
Company strongly discourages all such transactions by officers, directors and all other employees.
XIII. SHORT SALES AND HEDGING PROHIBITED
All directors, officers and employees are prohibited from engaging in short sales of the
Company’s securities. In addition, all directors, officers and employees may not engage in any
hedging transactions in the Company’s securities and may not pledge the Company’s securities or
include the Company’s securities in a margin account.
XIV.
INQUIRIES
Please direct your questions as to any of the matters discussed in this Policy to the
Company’s General Counsel, Greg Morical.
9
Exhibit A
Certification
To Calumet, Inc.:
I hereby certify that:
1. I have received a copy of Calumet, Inc’s Insider Trading Policy (the “Policy”).
2. I have read and understand the Policy.
3. I will comply with the policies and procedures set forth in the Policy.
4. I understand and agree that, as long as I am [a[n] director, officer, or employee] of
Calumet, Inc. or one of its direct or indirect subsidiaries or other affiliates, my failure
to comply in all respects with Calumet, Inc’s policies, including the Policy, is a
legitimate basis for termination for cause of my employment or other relationship
with Calumet, Inc. or any direct or indirect subsidiary or other affiliate to which my
employment or other relationship now relates or may in the future relate.
(Signature)
(Type or Print Name)
Date:
This document states a policy of Calumet, Inc. and is not intended to be regarded as the
rendering of legal advice.
10
APPENDIX A:
Guidelines for Rule 10b5-1 Plans
Rule 10b5-1 provides an affirmative defense from insider trading liability under Rule 10b-5. In
order to be eligible to rely on this defense, a person subject to the Insider Trading Policy (the “Insider
Trading Policy”) of Calumet, Inc. (the “Company”) must enter into a Rule 10b5-1 trading plan for
transactions in the Company’s securities that meets certain conditions specified in the rule (a “Rule
10b5-1 Plan”).
As such, the Company permits directors, officers and employees of the Company as well as
such persons’ Family Members and Controlled Entities to enter into Rule 10b5-1 Plans and has adopted
the following guidelines regarding the adoption, modification and termination of any such Rule 10b5-1
Plans. All references in the guidelines set forth in this Appendix A (“these guidelines”) to you should be
read to include your Family Members and Controlled Entities. Capitalized terms used in these
guidelines without definition have the meaning set forth in the Insider Trading Policy.
These guidelines are in addition to, and not in lieu of, the requirements and conditions of Rule
10b5-1. The General Counsel of the Company will interpret and administer these guidelines for
compliance with the Insider Trading Policy and the requirements below. No personal legal or financial
advice is being provided by the Company regarding any Rule 10b5-1 Plan or proposed trades. You
remain ultimately responsible for ensuring that your Rule 10b5-1 Plan and contemplated transactions
fully comply with applicable securities laws. It is recommended that you consult with your own
attorney, broker, or other advisors about any contemplated Rule 10b5-1 Plan. Note that if you are a
director or Section 16 officer (as defined below), the Company is required to disclose the material
terms of your Rule 10b5-1 Plan, other than respect to price, in the Company’s periodic report for the
quarter in which the Rule 10b5-1 Plan is adopted or terminated or modified (as described below).
1. Pre-Clearance Requirement. The Rule 10b5-1 Plan must be reviewed and approved, first by
the broker administering the Rule 10b5-1 Plan, and then by the General Counsel prior to its
adoption. If you wish to implement a Rule 10b5-1 Plan, you must pre- clear the plan with the
General Counsel prior to the entry into the plan in accordance with the procedures set forth in
the Insider Trading Policy and these guidelines; thus it is recommended that you reach out to the
broker administering the Rule 10b5-1 Plan in enough time to meet this deadline.
2. Time of Adoption. Subject to the pre-clearance requirements described above, the Rule 10b5-
1 Plan must be adopted at a time when:
●
You are not aware of any Material Nonpublic Information; and
●
The trading window set forth in the Insider Trading Policy is open (if you are subject to
the trading windows).
3. Plan Instructions. Any Rule 10b5-1 Plan you adopt must either:
●
specify the amount, price and date of the sales (or purchases) of Company securities to
be effected;
11
●
provide a formula, algorithm or computer program for determining when to sell (or
purchase) the Company’s securities, the quantity to sell (or purchase) and the price; or
●
delegate decision-making authority with regard to these transactions to a broker or other
agent without any Material Nonpublic Information about the Company or the
Company’s securities.
For the avoidance of doubt, you may not subsequently influence how, when, or whether to
effect purchases or sales with respect to the securities subject to an approved and adopted Rule 10b5-1
Plan.
4. Signed. The Rule 10b5-1 Plan must be signed by you.
5. No Hedging. You may not have entered into or altered a corresponding or hedging transaction
or position with respect to the securities subject to the Rule 10b5-1 Plan and must agree not to
enter into any such transaction while the Rule 10b5-1 Plan is in effect.
6. Good Faith Requirements. You must enter into the Rule 10b5-1 Plan in good faith and not as
part of a plan or scheme to evade the prohibitions of Rule 10b5 under the Exchange Act. You
must act in good faith with respect to the Rule 10b5-1 Plan for the entirety of its duration.
7. Certifications for Directors and Officers. If you are a director or officer, as defined in Rule
16a-1(f) under the Exchange Act (“Section 16 officer”), the Rule 10b5-1 Plan must include the
following certifications required by Rule 10b5-1(c)(1)(ii)(C): (1) you are not aware of any
Material Nonpublic Information about the Company or its securities; and (2) you are adopting
the Rule 10b5-1 Plan in good faith and not as part of a plan or scheme to evade the prohibitions
of Rule 10b-5 under the Exchange Act.
8. Cooling Off Periods. The first trade under the Rule 10b5-1 Plan may not occur until the
expiration of a cooling-off period as follows:
●
If you are a director or Section 16 officer, the later of (1) two business days following
the filing of the Form 10-Q or Form 10-K for the completed fiscal quarter in which the
Rule 10b5-1 Plan was adopted and (2) 90 calendar days after adoption of the Rule 10b5-
1 Plan; provided, however, that the required cooling-off period shall in no event exceed
120 days.
●
If you are not a director or Section 16 officer, 30 days after adoption of the Rule 10b5-1
Plan.
9. No Overlapping Rule 10b5-1 Plans. No more than one Rule 10b5-1 Plan can be effecting
trades at a time (except eligible sell-to-cover taxes Rule 10b5-1 Plans (“Eligible STC Rule
10b5-1 Plans”), as discussed in greater detail later in this section). Notwithstanding the
foregoing, two separate Rule 10b5-1 Plans can be in effect at the same time (but not trading at
the same time) so long as: (a) your later-commencing plan does not begin trading until the
completion of the cooling-off period (as described in Section 8 above) that would have applied
to you if the later-commencing plan was adopted on the date all trades under the earlier-
commencing plan are completed or expire without execution or the plan is otherwise terminated;
and (b) your later-commencing plan meets all other conditions set forth in these guidelines
(including Sections 1 through 7 and 10).
12
An Eligible STC Rule 10b5-1 Plan is not subject to the limitations set forth in this Section 9. An
Eligible STC Rule 10b5-1 Plan is a contract, instruction, or plan that authorizes an agent to sell
only such securities as are necessary to satisfy tax withholding obligations arising exclusively
from the vesting of a compensatory award, such as restricted stock, restricted stock units or
stock appreciation rights (but not options), and you do not otherwise exercise control over the
timing of such sales. Prior to adoption, an Eligible STC Rule 10b5-1 Plan must meet all other
requirements set forth in these guidelines, other than the limitations set forth in Sections 9 and
10.
10. Single Transaction Plans. Other than an eligible STC Rule 10b5-1 Plan as described in
Section 9 above, you may not enter into more than one Rule 10b5-1 Plan designed to effect the
open-market purchase or sale of the total amount of securities as a single transaction during any
rolling 12-month period. A single-transaction plan is “designed to effect” the purchase or sale
of securities as a single transaction when the terms of the plan would, for practical purposes,
directly or indirectly require execution in a single transaction.
11. Modifications and Terminations.
●
Modifications/amendments and terminations of an existing Rule 10b5-1 Plan are
strongly discouraged due to legal risks, and can affect the validity of trades that have
taken place under the plan prior to such modification/amendment or termination. Under
Rule 10b5-1 and these guidelines, any modification/amendment to the amount, price, or
timing of the purchase or sale of the securities underlying the Rule 10b5-1 Plan will be
deemed to be a termination of the current Rule 10b5-1 Plan and creation of a new Rule
10b5-1 Plan. If you are considering administerial changes to your Rule 10b5-1 Plan, such
as changing the account information, you should consult with the General Counsel in
advance to confirm that any such change does not constitute an effective termination of
your plan.
As such, the modification/amendment of an existing Rule 10b5-1 Plan must be reviewed
and approved in advance by the General Counsel in accordance with the pre-clearance
procedures set forth in the Insider Trading Policy and these guidelines, and will be
subject to all the other requirements set forth in Sections 2 through 10 of these
guidelines regarding the adoption of a new Rule 10b5-1 Plan.
●
The termination (other than through an amendment or modification) of an existing Rule
10b5-1 Plan must be reviewed and approved in advance by the General Counsel in
accordance with pre-clearance procedures set forth in the Insider Trading Policy and
these guidelines. Except in limited circumstances, the termination of a Rule 10b5-1 Plan
will not be approved unless:
i. You terminate a Rule 10b5-1 Plan at a time when you are not aware of Material
Nonpublic Information; and
ii. The trading window set forth in the Insider Trading Policy is open (if you are
subject to the trading windows).
Exhibit 21.1
SUBSIDIARIES OF CALUMET, INC.
(As of December 31, 2024)
Name of Subsidiary
Jurisdiction of Organization
Calumet Operating, LLC
Delaware
Calumet Refining, LLC
Delaware
Calumet Shreveport Refining, LLC
Delaware
Calumet Finance Corp.
Delaware
Calumet Karns City Refining, LLC
Delaware
Calumet Dickinson Refining, LLC
Delaware
Calumet Missouri, LLC
Delaware
Calumet Montana Refining, LLC
Delaware
Montana Renewables, Inc.
Delaware
Montana Renewables Holdings, Inc.
Delaware
Montana Renewables Holdings LLC
Delaware
Montana Renewables, LLC
Delaware
Calumet Branded Products, LLC
Delaware
Bel-Ray Company, LLC
Delaware
Kurlin Company, LLC
Delaware
Calumet Mexico, LLC
Delaware
Calumet Princeton Refining, LLC
Delaware
Calumet Cotton Valley Refining, LLC
Delaware
Calumet International, Inc.
Delaware
Calumet Paralogics, Inc.
Delaware
Founders Insurance Holding, LLC
North Carolina
Solide Insurance Company, LLC
North Carolina
Calumet Specialty Products Canada, ULC
Canada
Calumet Specialty Oils de Mexico, S. de R.L. de C.V.
Mexico
Calumet Africa Proprietary Limited
South Africa
Calumet GP, LLC
Delaware
Calumet Specialty Products Partners, L.P.
Delaware
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We have issued our reports dated February 28, 2025, with respect to the consolidated financial statements and internal
control over financial reporting included in the Annual Report of Calumet, Inc. on Form 10-K for the year ended
December 31, 2024. We consent to the incorporation by reference of said reports in the Registration Statements of
Calumet, Inc. on Form S-3 (File No. 333-284267 and File No. 333-281458) and on Form S-8 (File No. 333-280750).
/s/ GRANT THORNTON LLP
Pittsburgh, Pennsylvania
February 28, 2025
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1)
Registration Statement (Form S-8 No. 333-280750) of Calumet, Inc.;
(2)
Registration Statement (Form S-3 No. 333-284267) of Calumet, Inc.;
(3)
Registration Statement (Form S-3 No. 333-281458) of Calumet, Inc.
of our report dated February 29, 2024 (except for the affects of adopting ASU 2023-07 in Note 18, as to which the date
is February 28, 2025), with respect to the consolidated financial statements of Calumet, Inc., for the years ended
December 31, 2023 and 2022 included in this Annual Report (Form 10-K) for the year ended December 31, 2024.
/s/ Ernst & Young LLP
Indianapolis, Indiana
February 28, 2025
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Todd Borgmann, certify that:
1. I have reviewed this Annual Report on Form 10-K of Calumet, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date:
February 28, 2025
/s/ Todd Borgmann
Todd Borgmann
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, David Lunin, certify that:
1. I have reviewed this Annual Report on Form 10-K of Calumet, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Date:
February 28, 2025
/s/ David Lunin
David Lunin
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Exhibit 32.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
UNDER SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002, 18 U.S.C. § 1350
In connection with the Annual Report of Calumet, Inc. (the “Company”) on Form 10-K for the year ended
December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of
the undersigned officers of the Company, does hereby certify that:
(a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934.
(b) The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
February 28, 2025
/s/ Todd Borgmann
Todd Borgmann
President and Chief Executive Officer
(Principal Executive Officer)
February 28, 2025
/s/ David Lunin
David Lunin
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 97.1
CALUMET, INC.
COMPENSATION RECOUPMENT (CLAWBACK) POLICY
Recoupment of Incentive-Based Compensation
It is the policy of Calumet, Inc. (the “Company”) that, in the event the Company is required
to prepare an accounting restatement of the Company’s financial statements due to the Company’s
material non-compliance with any financial reporting requirement under the federal securities laws
(including any such correction that is material to the previously issued financial statements, or that
would result in a material misstatement if the error were corrected in the current period or left
uncorrected in the current period), the Company will recover on a reasonably prompt basis the
amount of any Incentive-Based Compensation Received by a Covered Executive during the
Recovery Period that exceeds the amount that otherwise would have been Received had it been
determined based on the restated financial statements.
Policy Administration and Definitions
This Policy is administered by the Compensation Committee (the “Committee”) of the
Company’s Board of Directors, subject to ratification by the independent members of the Board of
Directors with respect to application of this Policy to the Company’s Chief Executive Officer, and
is intended to comply with, and as applicable to be administered and interpreted consistent with,
and subject to the exceptions set forth in, Listing Standard 5608 adopted by The Nasdaq Stock
Market to implement Rule 10D-1 under the Securities Exchange Act of 1934, as amended
(collectively, “Rule 10D-1”).
For purposes of this Policy:
“Incentive-Based Compensation” means any compensation granted, earned, or vested
based in whole or in part on the Company’s attainment of a financial reporting measure that
was Received by a person (i) on or after October 2, 2023 and after the person began service
as a Covered Executive, and (ii) who served as a Covered Executive at any time during the
performance period for the Incentive-Based Compensation. A financial reporting measure
is (i) any measure that is determined and presented in accordance with the accounting
principles used in preparing the Company’s financial statements and any measure derived
wholly or in part from such a measure, and (ii) any measure based in whole or in part on
the Company’s stock price or total shareholder return.
Incentive-Based Compensation is deemed to be “Received” in the fiscal period during
which the relevant financial reporting measure is attained, regardless of when the
compensation is actually paid or awarded.
“Covered Executive” means any “executive officer” of the Company as defined under Rule
10D-1.
2
“Recovery Period” means the three completed fiscal years immediately preceding the date
that the Company is required to prepare the accounting restatement described in this Policy,
all as determined pursuant to Rule 10D-1, and any transition period of less than nine
months that is within or immediately following such three fiscal years.
If the Committee determines the amount of Incentive-Based Compensation Received by a
Covered Executive during a Recovery Period exceeds the amount that would have been Received
if determined or calculated based on the Company’s restated financial results, such excess amount
of Incentive-Based Compensation shall be subject to recoupment by the Company pursuant to this
Policy. For Incentive-Based Compensation based on stock price or total shareholder return, where
the amount of erroneously awarded compensation is not subject to mathematical recalculation
directly from the information in an accounting restatement, the Committee will determine the
amount based on a reasonable estimate of the effect of the accounting restatement on the relevant
stock price or total shareholder return. In all cases, the calculation of the excess amount of
Incentive-Based Compensation to be recovered will be determined without regard to any taxes
paid with respect to such compensation. The Company will maintain and will provide to The
Nasdaq Stock Market documentation of all determinations and actions taken in complying with
this Policy. Any determinations made by the Committee under this Policy shall be final and
binding on all affected individuals.
The Company may effect any recovery pursuant to this Policy by requiring payment of
such amount(s) to the Company, by set-off, by reducing future compensation, or by such other
means or combination of means as the Committee determines to be appropriate. The Company
need not recover the excess amount of Incentive-Based Compensation if and to the extent that the
Committee determines that such recovery is impracticable, subject to and in accordance with any
applicable exceptions under The NASDAQ Stock Market listing rules, and not required under Rule
10D-1, including if the Committee determines that the direct expense paid to a third party to assist
in enforcing this Policy would exceed the amount to be recovered after making a reasonable
attempt to recover such amounts. The Company is authorized to take appropriate steps to
implement this Policy with respect to Incentive-Based Compensation arrangements with Covered
Executives.
Any right of recoupment or recovery pursuant to this Policy is in addition to, and not in lieu
of, any other remedies or rights of recoupment that may be available to the Company pursuant to
the terms of any other policy, any employment agreement or plan or award terms, and any other
legal remedies available to the Company; provided that the Company shall not recoup amounts
pursuant to such other policy, terms or remedies to the extent it is recovered pursuant to this Policy.
The Company shall not indemnify any Covered Executive against the loss of any Incentive-Based
Compensation (or provide any advancement of expenses in such instance), including any payment
or reimbursement for the cost of third-party insurance purchased by any Covered Executives to
fund potential recovery obligations under this Policy.