Calumet’s $110m sale: Why Royal Purple’s industrial business is changing hands

Calumet, Inc. (NASDAQ: CLMT) has announced a definitive agreement to sell the Royal Purple industrial business to a wholly owned subsidiary of Lubrication Engineers, Inc., a portfolio company of Aurora Capital Partners, for $110 million. The transaction, expected to close in the first half of 2025, marks a significant step in Calumet’s ongoing effort to streamline its business and focus on core growth areas while using the proceeds to reduce its debt burden.

Under the agreement, Lubrication Engineers will acquire the Royal Purple industrial business, which includes a range of high-performance synthetic lubricants used in industrial applications such as gear lubrication, bio-environmental lubrication, stationary natural gas engines, hydraulic systems, and compressors. The deal also grants Lubrication Engineers an exclusive license to use the Royal Purple brand for industrial applications, further expanding its market reach.

Why Is Calumet Selling Its Royal Purple Industrial Business?

The decision to divest the Royal Purple industrial business aligns with Calumet’s broader corporate strategy to refine its business model and concentrate on high-margin, high-growth segments. The company will retain ownership of the Royal Purple consumer segment, which serves the automotive and performance lubrication markets, and will continue to operate its Porter, Texas, production facility.

Scott Obermeier, Executive Vice President of Specialties at Calumet, explained that the transaction reflects the company’s commitment to optimizing its portfolio and focusing on areas where it can leverage its integrated specialties network. He noted that the sale allows Calumet to concentrate on specialty products with stronger growth potential.

Chief Executive Officer Todd Borgmann emphasized the financial benefits of the transaction, stating that the sale aligns with Calumet’s goal of deleveraging its balance sheet. He added that the Royal Purple industrial business is transitioning to a company well-equipped to continue its success, ensuring that the business remains in capable hands.

How Will Calumet Use the Proceeds From the Sale?

Calumet intends to use the $110 million in proceeds primarily for debt reduction, reinforcing its ongoing efforts to improve financial flexibility and liquidity. Over the past few years, the company has been actively restructuring its portfolio to strengthen its balance sheet, and this transaction accelerates that strategy.

By divesting non-core industrial assets, Calumet can better allocate resources to expanding its high-margin businesses, including Montana Renewables and the Royal Purple consumer segment. The company has been shifting its focus toward renewable fuels, specialty lubricants, and branded consumer products, positioning itself for long-term profitability.

What Does This Mean for the Future of Royal Purple?

Although the industrial segment of Royal Purple will transition to Lubrication Engineers, Calumet will continue to grow the Royal Purple consumer business, which includes synthetic automotive lubricants and high-performance motor oils. The consumer segment remains a strong brand in the automotive market, with products available through national retail chains and specialty auto parts stores.

The retained Royal Purple consumer portfolio includes notable products such as High Performance Motor Oil, HPS, HMX, Max EZ, Max Gear, Max-Clean, XPR, and Duralec Super. This division represents a core growth area for Calumet, as it continues to scale its performance lubrication business and expand its market presence.

How Did Calumet Perform Financially in Q4 2024?

Alongside the announcement of the Royal Purple industrial business sale, Calumet reported its fourth-quarter and full-year 2024 financial results, revealing a net loss of $40.7 million, or $0.47 per share. Despite the loss, the company generated Adjusted EBITDA of $56.6 million, reflecting ongoing strength in its Performance Brands division and improved operational efficiencies.

The Performance Brands segment, which includes Royal Purple consumer products, recorded a 15% year-over-year increase in sales volume, highlighting strong market demand. The company also provided an update on its Montana Renewables division, which has benefited from recent funding secured through the U.S. Department of Energy (DOE) loan program in February 2025.

What Impact Will the DOE Loan Have on Montana Renewables?

A key development in Calumet’s renewable energy strategy is the recent DOE-backed financing for Montana Renewables, which has unlocked additional liquidity and cost-saving opportunities. According to CEO Todd Borgmann, this funding eliminates approximately $80 million annually in third-party debt servicing costs, allowing the company to reinvest in growth initiatives such as the MaxSAF™ expansion project.

The Montana Renewables segment, which reported $10.9 million in Adjusted EBITDA in Q4 2024, is a central pillar of Calumet’s long-term strategy. The segment has faced fluctuations in profitability, but with the completion of a planned turnaround in Q4 2024, operations have stabilized, setting the stage for further expansion.

How Has the Market Reacted to Calumet’s Strategic Moves?

Market reaction to Calumet’s asset sale and financial results has been mixed, with analysts closely watching how the company executes its debt reduction plans. While the sale of the Royal Purple industrial business is viewed as a positive step toward improving its balance sheet, concerns remain regarding Calumet’s ability to maintain profitability.

Calumet’s stock has experienced volatility in response to these announcements, reflecting both investor optimism over the DOE loan and caution regarding ongoing financial performance. Analysts will be monitoring how the company leverages its renewed financial position to drive growth in its specialties and renewables businesses.

What’s Next for Calumet?

Looking ahead, Calumet is expected to focus on expanding its specialty brands, including Royal Purple consumer products, while scaling Montana Renewables through the MaxSAF expansion. The company remains committed to reducing leverage and improving cash flow, ensuring long-term stability. With a renewed financial focus and targeted asset divestments, Calumet is positioning itself for sustained profitability and market leadership in the specialty lubricants and renewable fuels sectors.

As the company continues executing its growth strategy, industry analysts and investors will closely monitor its progress in strengthening its operational foundation. The success of these initiatives will determine Calumet’s ability to capitalize on emerging opportunities in the evolving energy and specialty chemicals markets.