Calumet (CLMT) Q2 Revenue Tops by 11% | The Motley Fool

Calumet (CLMT -1.94%), a producer of specialty hydrocarbon products and renewable fuels, released its financial results for the second quarter of fiscal 2025 on August 8, 2025. The key headline: revenue (GAAP) climbed to $1,026.6 million in Q2 2025, beating analyst estimates by nearly $101.4 million, or 10.96% (GAAP). However, the bottom line disappointed—its net loss came in at $(1.70) per share (GAAP) in Q2 2025, which was much steeper than the projection of $(0.34) per share (GAAP). Adjusted EBITDA fell to $55.1 million in Q2 2025 from $74.8 million in Q2 2024. Cost-cutting initiatives were a bright spot, with reductions surpassing $42 million in the first half of 2025, but persistent losses and segment volatility limited the overall assessment of the quarter.

Source: Analyst estimates provided by FactSet. Management expectations based on management’s guidance, as provided in Q1 2025 earnings report.

Understanding Calumet’s Business and Current Focus Areas

Calumet manufactures and sells specialty hydrocarbon products such as lubricating oils, solvents, waxes, and performance fluids. It also operates in the renewable fuels space, with a major focus on sustainable aviation fuel (SAF). Its business is divided into key segments: Specialty Products and Solutions, Performance Brands, and Montana Renewables, which produces renewable fuels. Each segment caters to distinct industrial, consumer, and energy markets.

In recent years, Calumet has prioritized expanding its renewables platform, improving operational efficiency, and reducing debt. Segment resilience—especially in specialty products—operational discipline, and managing regulatory-driven revenue from tax credits in renewables have become critical to its ongoing strategy. The company faces challenges from market volatility, policy uncertainty, and persistent net losses, but is targeting improved margins and consistency through ongoing cost reductions and focused investments in SAF capacity expansion.

Key Developments and Segment Performance in the Quarter

The company’s overall revenue (GAAP) surpassed analyst expectations by nearly $101.4 million in Q2 2025, which points to robust demand for its specialty products. However, this top-line strength could not offset the steep net loss of $(147.9) million (GAAP) in Q2 2025. Adjusted EBITDA, an important measure of operational earnings that strips out interest, taxes, and non-cash items, fell 26% to $55.1 million in Q2 2025 compared to Q2 2024—impacted by segment-specific challenges and volatility, especially at Montana Renewables. The expanded Adjusted EBITDA with Tax Attributes, which includes Production Tax Credits (PTCs) earned from renewable fuel production, reached $76.5 million in Q2 2025, with the year-over-year increase solely due to the inclusion of tax attributes.

The Specialty Products and Solutions segment, which manufactures products like lubricating oils and solvents, demonstrated resilience. Though segment sales were down 16% year-over-year to $627.9 million in Q2 2025, adjusted gross profit (non-GAAP) increased by 4% year-over-year and margins improved. Adjusted gross profit per barrel jumped from $12.51 in Q2 2024 to $13.81 in Q2 2025. Notably, this was achieved despite scheduled downtime for a facility turnaround. The segment’s adjusted EBITDA margin climbed to 10.6% in Q2 2025, even as production and sales volumes dipped slightly due to the turnaround. Leadership credited cost action and margin discipline for offsetting the impact of lower volumes.

Performance Brands, comprising consumer and industrial products like the TruFuel brand (a leading specialty fuel product), saw adjusted EBITDA decrease slightly to $13.5 million in Q2 2025. The slight dip was primarily due to the divestiture of the Royal Purple Industrial business in March 2025, reducing the segment’s revenue base but streamlining operations. TruFuel continued to perform well, maintaining a strong market share of about 65% in its niche market as of 2024. Adjusted gross profit per barrel held nearly steady at $140.25 in Q2 2025.

Montana Renewables, the segment responsible for renewable diesel and sustainable aviation fuel, continued to face earnings challenges. It reported a negative adjusted EBITDA of $(5.1) million in Q2 2025. However, when including tax attributes like PTCs, the Adjusted EBITDA with Tax Attributes for the Montana Renewables segment was $16.3 million in Q2 2025, reflecting the increasing role of government credits in the segment’s financial results. Operating costs per gallon in Montana Renewables dropped to $0.43 in Q2 2025, the lowest since the platform launched. Despite these operational gains, underlying gross profit in the segment remained negative, at $(2.0) million adjusted in Q2 2025, a deterioration from $19.9 million in Q2 2024. Management maintained progress toward expanding annual SAF capacity to 120–150 million gallons by Q2 2026, with capital spending projections cut significantly to $20–30 million for this phase, down from prior forecasts of $150–250 million for the SAF capacity expansion expected by Q2 2026.

Cost reduction efforts remain a prominent feature of the company’s results. Total operating cost savings reached $42 million in the first half of 2025. This was achieved through a mix of process improvements and strategic divestitures. On the balance sheet, Calumet reported net cash used in operations of $(108.0) million in the first half of 2025, with cash and equivalents of $110.6 million as of June 30, 2025 and restricted cash of $80.0 million at June 30, 2025 quarter-end.

One-off and non-operating charges continue to weigh heavily. The net RINs (Renewable Identification Number) compliance obligation, required for renewable fuel producers under U.S. law, increased sharply from $245.4 million as of December 31, 2024 to $457.0 million as of June 30, 2025. Liabilities (GAAP) totaled $3.54 billion as of June 30, 2025, while stockholders’ equity stands at a negative position, amplifying financial pressure. However, A recent Department of Energy loan and additional asset sales, including the Royal Purple divestiture, have bolstered liquidity and enabled nearly $230 million in senior note redemptions over the past four months.

No dividends were declared this quarter.

Looking Forward: Guidance, Strategic Moves, and Investor Watchpoints

Management signaled continued emphasis on cost containment, scaling sustainable aviation fuel operations, and reducing debt through strategic asset sales and improved operational cash flow. The company is also aiming to monetize part of the Montana Renewables business in 2026, targeting $800 million in restricted debt as a key milestone. Major capital projects, especially the MaxSAF expansion, are projected to proceed more quickly and at a far lower capital cost than previously expected, with management guiding to 120–150 million gallons of SAF capacity by Q2 2026 for $20 million to $30 million in capital expenditures.

No explicit quantitative financial guidance for the next quarter or full year was provided. Company leaders expressed general optimism about sequential improvement and self-funding the business through cost actions, added SAF volumes, and completion of key initiatives. However, they underscored that progress depends on further regulatory clarity regarding tax credits and renewable fuel policy, as well as ongoing Lean operations and working capital discipline. Investors should monitor realization of Production Tax Credits as cash, progress on SAF expansion, and any changes in the regulatory environment, given their direct impact on the bottom line.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.