Segments and Related Information

12 Months Ended

Dec. 31, 2024

Segments and Related Information

Segments and Related Information

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.

● 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.

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

	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

	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

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.