Segments and Related Information

3 Months Ended

Mar. 31, 2025

Segments and Related Information

Segments and Related Information

13. 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 Montana Renewables facility and our Great Falls specialty asphalt 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 Specialty Products and Solutions, Montana/Renewables, or Performance Brands segments.

During the first quarter of 2025, the CODM changed the definition and calculation of Adjusted EBITDA to exclude RINs incurrence expense (see item (k) below). The Company’s RINs incurrence expense is calculated by multiplying the RINs obligation in the period incurred (based on actual results) by the spot price on the day the RINs obligation is incurred for each accounting period. The resulting non-cash incurrence expenses are included in cost of sales in the statement of operations. The Company believes that this revised definition and calculation better reflects the performance of the Company’s business segments including cash flows because it excludes these non-cash fluctuations. Adjusted EBITDA has been revised for all periods presented to consistently reflect this change.

The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies as disclosed in Note 3 — “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; (k) RINs incurrence expense; and (l) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or expense.

Reportable segment information for the three months ended March 31, 2025 and 2024, is as follows (in millions):

	Specialty
	Products and		Performance		Montana/						Consolidated
Three Months Ended March 31, 2025	Solutions		Brands		Renewables		Corporate		Eliminations		Total
Sales:
External customers	$	650.1	$	82.1	$	261.7	$	—	$	—	$	993.9
Inter-segment sales		4.8		—		—		—		(4.8)		—
Total sales	$	654.9	$	82.1	$	261.7	$	—	$	(4.8)	$	993.9
Cost of sales	$	684.1	$	59.9	$	331.3	$	—	$	—	$	1,075.3
Gross profit (loss)	$	(34.0)	$	22.2	$	(69.6)	$	-	$	—	$	(81.4)
Adjusted EBITDA	$	56.3	$	15.8	$	(13.6)	$	(20.4)	$	—	$	38.1
Reconciling items to net loss:
Depreciation and amortization		16.7		1.9		27.9		0.2		—		46.7
LCM / LIFO (gain) loss		(0.7)		1.3		(0.7)		—		—		(0.1)
(Gain) loss on sale of business		—		(64.4)		—		2.2		—		(62.2)
Interest expense		4.6		—		18.3		35.6		—		58.5
Debt extinguishment costs		—		—		47.6		—		—		47.6
Unrealized gain on derivatives		(0.1)		—		—		—		—		(0.1)
RINs incurrence expense		22.3		—		8.1		—		—		30.4
RINs mark-to-market loss		60.7		—		26.1		—		—		86.8
Other non-recurring expenses												3.2
Equity-based compensation and other items												(13.5)
Income tax expense												0.4
Noncontrolling interest adjustments												2.4
Net loss											$	(162.0)
Capital expenditures	$	12.0	$	0.2	$	7.9	$	0.3	$	—	$	20.4
PP&E, net	$	344.4	$	31.0	$	1,032.6	$	4.9	$	—	$	1,412.9

	Specialty
	Products and		Performance		Montana/						Consolidated
Three Months Ended March 31, 2024	Solutions		Brands		Renewables		Corporate		Eliminations		Total
Sales:
External customers	$	681.6	$	79.7	$	244.5	$	—	$	—	$	1,005.8
Inter-segment sales		5.0		0.1		—		—		(5.1)		—
Total sales	$	686.6	$	79.8	$	244.5	$	—	$	(5.1)	$	1,005.8
Cost of sales	$	596.3	$	57.4	$	273.6	$	—	$	—	$	927.3
Gross profit (loss)	$	85.3	$	22.3	$	(29.1)	$	—	$	—	$	78.5
Adjusted EBITDA	$	47.2	$	13.4	$	(13.4)	$	(19.1)	$	—	$	28.1
Reconciling items to net loss:
Depreciation and amortization		17.6		2.1		25.4		0.3		—		45.4
LCM / LIFO (gain) loss		(3.6)		0.2		12.4		—		—		9.0
Interest expense		7.8		—		17.0		36.0		—		60.8
Debt extinguishment costs		—		—		—		0.2		—		0.2
Unrealized gain on derivatives		(35.7)		—		—		—		—		(35.7)
RINs incurrence expense		5.4		—		1.1		—		—		6.5
RINs mark-to-market gain		(47.9)		—		(23.2)		—		—		(71.1)
Other non-recurring expenses (1)												60.8
Equity-based compensation and other items												(7.3)
Income tax expense												0.2
Noncontrolling interest adjustments												0.9
Net loss											$	(41.6)
Capital expenditures	$	14.1	$	0.3	$	11.0	$	0.1	$	—	$	25.5
PP&E, net	$	368.5	$	32.9	$	1,082.9	$	1.7	$	—	$	1,486.0

(1) For the three months ended March 31, 2024, other non-recurring expenses included a $51.9 million realized loss on derivatives related to the embedded derivatives for our inventory financing arrangements.

Geographic Information

International sales accounted for less than ten percent of consolidated sales in the three months ended March 31, 2025 and 2024.

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 products, and other specialty and fuels products. The following table sets forth the major product category sales for each segment for the three months ended March 31, 2025 and 2024 (dollars in millions):

	Three Months Ended March 31,
	2025				2024
Specialty Products and Solutions:
Lubricating oils	$	202.2	20.3	%	$	189.7	18.9	%
Solvents		104.7	10.5	%		102.4	10.2	%
Waxes		38.2	3.8	%		39.0	3.9	%
Fuels, asphalt and other by-products		305.0	30.7	%		350.5	34.8	%
Total	$	650.1	65.3	%	$	681.6	67.8	%
Montana/Renewables:
Gasoline	$	32.5	3.3	%	$	31.6	3.1	%
Diesel		23.4	2.4	%		27.9	2.8	%
Jet fuel		4.2	0.4	%		4.6	0.5	%
Asphalt, heavy fuel oils and other		36.0	3.6	%		30.1	3.0	%
Renewable fuels		165.6	16.7	%		150.3	14.9	%
Total	$	261.7	26.4	%	$	244.5	24.3	%
Performance Brands:	$	82.1	8.3	%	$	79.7	7.9	%
Consolidated sales	$	993.9	100.0	%	$	1,005.8	100.0	%

Major Customers

During the three months ended March 31, 2025 and 2024, the Company had no customer that represented 10% or greater of consolidated sales.

Major Suppliers

During the three months ended March 31, 2025, the Company had four suppliers that supplied approximately 88.8% of its crude oil supply. During the three months ended March 31, 2024, the Company had two suppliers that supplied approximately 88.1% of its crude oil supply.