Calumet, Inc. /DE (CLMT) stock intrinsic value fair value estimate & owner earnings analysis

Calumet, Inc. (formerly Calumet Specialty Products Partners, which converted from a partnership to a corporation in July 2024) runs three businesses. Specialty Products and Solutions refines crude at Shreveport, Cotton Valley and Princeton, Louisiana into specialty oils, solvents, waxes, asphalt and some fuels. Performance Brands sells lubricants and small-engine fuels under names such as Royal Purple, Bel-Ray and TruFuel; the industrial portion of Royal Purple was sold in 2025 for $96.9 million in cash. Montana/Renewables pairs the Great Falls, Montana asphalt plant with Montana Renewables, which since late 2022 has run the former Great Falls fuels refinery as a renewable diesel and sustainable aviation fuel (SAF) plant. How we measured earnings. We use the cash the business produces after the spending needed to keep it running. Calumet records its periodic refinery turnaround spending as an asset and writes it off over time; we treat that spending as an ongoing maintenance cost when it is paid. Equity compensation is treated as a real cost. Non-cash swings in the renewable fuel credit (RIN) liability, derivative marks and the 2025 gain on the Royal Purple sale are kept out of the earnings level; the RIN liability is dealt with separately below. On this basis, owner earnings after interest were about -$3.45 per share in 2023, -$1.77 in 2024 and +$0.46 in 2025. Before interest, which is the cash the business makes before paying its lenders, the figures were about -$74 million in 2023, $85 million in 2024 and $212 million in 2025. We value from 2024 onward: 2023 still carried $272 million of capital spending, mostly to finish converting the Great Falls refinery to renewable fuels, and is not a normal year. Filings for the current corporate entity begin with 2022, so the history is shorter than we would like and does not cover a full refining cycle. Starting level. The median of 2024 and 2025 is about $148 million a year before interest. The second half of 2025 and the second quarter of 2026 ran stronger: specialty sales volumes have been above 20,000 barrels a day for seven straight quarters and the company reported specialty earnings roughly doubling year over year in the second quarter of 2026. We therefore start the base case at $180 million a year. That is below 2025's $212 million, so no growth is assumed; 2025 itself grew sharply from 2024. Renewable fuel credits. As a small refiner, Calumet must blend renewable fuel, buy RIN credits, or win a small refinery exemption from the EPA. Its gross need is about 65 million credits a year. On August 22, 2025 the EPA granted full or partial exemptions on every petition Calumet had filed through 2024, cutting its accrued backlog from 396 million credits to 89 million; Calumet is appealing the partial grants. The 2025 petition is still undecided, and with credit prices much higher in 2026 the accrued liability rose to $480 million at June 30, 2026 from $169 million at the end of 2025. Because this liability has not been paid in cash, it is not in the earnings figures above, so we count it as money owed and also charge a yearly cost for credits that are not exempted. What the company owes. At June 30, 2026 total borrowings were about $2.30 billion: senior notes at 9.25% to 9.75% due 2028, 2029 and 2031; a Department of Energy-guaranteed loan of roughly $800 million at Montana Renewables that is non-recourse to the parent; asset financings; and the revolving credit facility. Unrestricted cash was $110 million. Warburg Pincus holds $246 million of preferred units in the Montana Renewables holding company that rank ahead of Calumet's shareholders. In July 2026 the company redeemed $100 million of 2028 notes and repaid a $15.5 million terminal financing, which does not materially change net debt. The senior notes cost far more than our 6% discount rate, and the January 2026 refinancing of the 2026 and 2027 notes was done at 9.75%, so we add the extra cost of that debt; the lower-rate DOE loan offsets part of it. Base case. Business cash flow of $180 million a year through 2029, less about $25 million a year for credits that are not exempted (the August 2025 decisions forgave roughly three-quarters of the accrued credits, and we assume a similar outcome going forward). The federal clean fuel production credit (Section 45Z) that supports Montana Renewables ends after 2029 under current law, so we take $20 million a year off from 2030. After that, what keeps the cash coming is the specialty franchise: more than a century of operation in niche products that customers qualify into their own formulations. We hold it flat with no growth. The business is worth about $2.32 billion. It owes about $2.71 billion: $2.19 billion of debt net of cash, the $246 million Warburg preferred, about $200 million of the credit liability after expected exemption relief, and about $75 million for above-market interest. That leaves about -$0.39 billion, or -$4.47 per share. In this case the business generates roughly $155 million a year, less than its roughly $170 to $210 million of yearly interest cost, so the value belongs to the lenders, not the shareholders. Bear case. Cash flow falls back toward the 2024 level, about $100 million a year. The EPA denies exemptions for 2025 onward, as it did for the whole industry in 2022, so the full 65 million credits a year must be bought (we assume about $65 million a year; 2026 credit prices would make this worse) and the full $480 million accrued liability must be settled. The senior notes keep being refinanced near 10%. The business is worth about $0.32 billion against about $3.07 billion owed, a shortfall of about $2.75 billion, or about -$31.36 per share. Here the company owes far more than it is worth and a restructuring that wipes out shareholders would be likely. Shareholders are not liable beyond the value of their shares, but the figure shows how deep the hole would be. Bull case. The run rate of the second half of 2025 and 2026 holds at about $260 million a year, helped by the completed first phase of the MaxSAF expansion, which lets Montana Renewables make more SAF from the same plant. The EPA grants the 2025 petition and corrects the partial exemptions as Calumet has asked, cutting the credit liability to about $100 million and the yearly cost to about $10 million. After 2029 the level steps down to $220 million when the 45Z credit ends. The business is worth about $3.81 billion against about $2.58 billion owed, leaving about $1.23 billion, or $14.03 per share. Cash flow comfortably covers interest in this case. What we left out. The next stage of the Montana expansion is not credited in any case. Management talks of 120 to 150 million gallons a year of SAF by spring 2027 and about 200 million by 2028, with throughput rising from 12,000 to 17,000 barrels a day, but as of the second-quarter 2026 report the funding plan and cost had not been finalized or disclosed. Warburg's right to push for an IPO or sale of Montana Renewables could put a market value on that business, but no transaction exists. Management's adjusted EBITDA figures were not used. We used 87.6 million diluted shares; 2 million outstanding warrants were not counted. What would make this wrong. If the strong 2026 specialty margins last for several more years, or if the Montana SAF expansion is funded through the non-recourse DOE loan and earns well, value could sit well above the bull case. If the EPA stops granting exemptions, the credit liability alone could absorb most of what the business is worth.