CVR PARTNERS, LP

CVR Partners, LP operates in the nitrogen fertilizer industry, producing and distributing nitrogen fertilizer products used by farmers to improve the yield and quality of their crops, primarily corn and wheat. The industry is characterized by global commodity pricing, with nitrogen fertilizer products being globally traded commodities subject to price competition. Demand is driven by global grain demand and prices, which are influenced by population growth, farmland per capita, dietary changes in the developing world, and increased consumption of bio-fuels. According to Fertecon, from 1981 to 2025, global fertilizer demand grew 6% annually, and global fertilizer use is projected to increase by 5% from 2022 through 2026. The United States is the world's third largest consumer and importer of nitrogen fertilizer, with Fertecon estimates indicating that China, India, and the United States are the top consumers representing 24%, 17%, and 10% of total global nitrogen fertilizer consumption for 2025, respectively. The Partnership's products are sold on a wholesale basis in the United States.

The nitrogen fertilizer industry is dominated by price considerations driven by raw material and transportation costs, currency fluctuations, trade barriers, and regulators. The Partnership's major domestic competitors include CF Industries Holdings, Inc., which sells significantly more nitrogen fertilizers in the United States than other industry participants; Nutrien Ltd.; Koch Fertilizer Company, LLC; and LSB Industries, Inc. The Partnership also encounters competition from foreign producers, including state-owned and government-subsidized entities that may have greater total resources. The Partnership benefits from logistical advantages for both feedstocks, ensuring a stable and secure supply chain. The Coffeyville Facility is the only nitrogen fertilizer facility in North America that utilizes pet coke in a gasification process to produce hydrogen. The East Dubuque Facility has an advantaged location in the heart of agriculture country, shipping substantially all of its products within 100 miles of the facility.

CVR Partners generates revenue by producing and distributing nitrogen fertilizer products, primarily UAN and ammonia, on a wholesale basis under contracts or purchase orders. Contracts with customers generally contain fixed pricing and have terms of less than one year. UAN and ammonia, including freight, accounted for approximately 67% and 24%, respectively, of total net sales for the year ended December 31, 2025. The Partnership distributes its products via railcars, trucks, and barges, with direct access to a barge dock on the Mississippi River. Retailers and distributors are the main customers for UAN, while the industrial and agricultural sectors are the primary recipients of ammonia products. The Partnership's top two customers represented 28% and 25% for the years ended December 31, 2025 and 2023, respectively, and the top customer represented 14% of net sales for the year ended December 31, 2024.

The Partnership operates two manufacturing facilities. The Coffeyville Facility in Coffeyville, Kansas includes a gasifier complex having a capacity of 89 million standard cubic feet per day of hydrogen, a 1,300 ton per day capacity ammonia unit and a 3,100 ton per day capacity UAN unit. It is the only nitrogen fertilizer facility in North America that utilizes pet coke in a gasification process to produce hydrogen. The East Dubuque Facility in East Dubuque, Illinois includes a 1,075 ton per day capacity ammonia unit and a 950 ton per day capacity UAN unit, with the flexibility to vary its product mix to upgrade a portion of its ammonia production into varying amounts of UAN and nitric acid. The East Dubuque Facility utilizes natural gas to produce hydrogen. The Partnership's products include ammonia, which is a direct application fertilizer and building block for other nitrogen products, and UAN, an aqueous solution of urea and ammonium nitrate that can be applied throughout the growing season and in tandem with pesticides and herbicides, typically commanding a premium price to urea and ammonia on a nitrogen equivalent basis.

The Partnership has undertaken significant greenhouse gas footprint reduction efforts. Since 2020, the Partnership has generated carbon offset credits from voluntary nitrous oxide abatement for one nitric acid plant at its Coffeyville Facility, with similar efforts at its East Dubuque Facility since June 2011. From 2021 to 2024, the N2O abatement systems at the East Dubuque Facility's two nitric acid plants and the Coffeyville Facility's nitric acid plant have abated, on average, the annual release of approximately 268,000 and 316,000 metric tons of CO2e, respectively. In December 2025, the Coffeyville Facility began operation of its second N2O abatement system on the remaining nitric acid plant. By combining nitrous oxide abatement and carbon oxide sequestration activities, the Partnership reduced its CO2e footprint by over 1.3 million metric tons in 2024. In January 2023, the Partnership entered into a series of agreements with CapturePoint LLC and certain unaffiliated third-party investors intended to qualify under the IRS safe harbor for certain joint ventures eligible to claim Section 45Q Credits and allow monetization of Section 45Q Credits expected to be generated from January 6, 2023 until March 31, 2030.

For the fiscal year ended December 31, 2025, the Partnership reported net sales of $473.9 million, compared to $478.2 million in the prior year. Net income was $73.6 million, compared to $82.5 million in 2024. Basic and diluted earnings per common unit were $6.96 and $6.95, respectively, compared to $7.80 and $7.79 in the prior year. The Partnership generated net cash provided by operating activities of $131.0 million, compared to $131.3 million in 2024. Adjusted EBITDA was $155.9 million, compared to $161.0 million in the prior year. The Partnership declared total cash distributions of $3.80 per common unit for 2025, compared to $4.20 per common unit for 2024.

The Partnership's growth vectors include its greenhouse gas footprint reduction efforts, particularly the carbon capture and sequestration activities at the Coffeyville Facility that qualify under Section 45Q of the Internal Revenue Code. The Partnership entered into agreements with CapturePoint LLC and unaffiliated third-party investors intended to allow monetization of Section 45Q Credits expected to be generated from January 6, 2023 until March 31, 2030. Additionally, the Coffeyville Facility is uniquely qualified to produce hydrogen and ammonia that could be certified 'blue' to a market increasingly demanding reduced carbon footprints. The Partnership also has the potential to utilize natural gas as an alternative to pet coke in the production of nitrogen fertilizer at the Coffeyville Facility and to increase the nameplate ammonia production.

The Partnership's growth strategy also includes potential acquisitions of businesses or assets and expansion projects, though these involve significant risks including intense competition for suitable targets, potential unavailability of financial resources, difficulties in identifying suitable projects, and risks associated with entry into new markets and lines of business. The Partnership may consider pursuing such opportunities from time to time to continue to grow and increase profitability.The Partnership's operational outlook includes continued adherence to the Chemical Facility Anti-Terrorism Standards program despite its expiration in June 2023. The East Dubuque Facility is regulated under the Maritime Transportation Security Act. The Partnership implements comprehensive security programs designed to comply with regulatory requirements and protect assets and employees. The Partnership also maintains comprehensive health and safety management systems, including compliance with OSHA Process Safety Management regulations.

The Partnership's capital allocation strategy is focused on distributing available cash generated by the business each quarter to common unitholders, with the current policy of the Board being to distribute an amount equal to available cash. The Partnership will likely need to rely primarily upon external financing sources, including commercial bank borrowings and the issuance of debt and equity securities, to fund acquisitions and expansion capital expenditures. The Partnership declared total cash distributions of $3.80 per common unit for 2025. The filing does not specify R&D spending levels, capital expenditure plans, or share repurchase authorization amounts.

The Partnership faces significant headwinds from the cyclical and highly volatile nature of nitrogen fertilizer and feedstock prices. Demand for nitrogen fertilizer products is dependent on fluctuating demand for crop nutrients by the global agricultural industry, and prices can be highly volatile. The Partnership's business is subject to intense price competition from both U.S. and foreign sources, with little or no product differentiation. The Partnership also faces risks from changes in U.S. trade policy, including the imposition of trade barriers and tariffs, which could result in reactions from U.S. trading partners and adversely affect the business.

The Partnership faces constraints from its geographic concentration in the Great Plains and Midwest states, making it subject to regional economic downturns and seasonal variations. Nitrogen fertilizer demand is seasonal, with higher net sales typically in the first half of the calendar year and lower net sales during the second half. The accumulation of inventory during low demand periods creates significant seasonal working capital and storage capacity requirements. The Partnership also faces risks from adverse weather conditions, including severe storms, hurricanes, tornadoes, floods, and wildfires, which could damage facilities or logistics assets and impair production and delivery capabilities.

The Partnership faces material risks from the cyclical and highly volatile nature of nitrogen fertilizer and feedstock prices, which could have a material adverse effect on results of operations, financial condition, and cash flows. The Partnership's two largest customers represented approximately 28% of net sales for the year ended December 31, 2025, and the loss of several significant customers could have a material adverse impact. The Partnership relies on a supply of pet coke from CVR Energy's Coffeyville refinery, which provided approximately 36% of pet coke requirements in 2025, and any interruption in supply could materially affect operations. The Partnership has $350.0 million in 6.125% Senior Secured Notes due 2028, and its level of indebtedness could limit ability to obtain additional financing, require significant cash flows for debt service, and restrict operational flexibility through financial covenants. Mr. Carl C. Icahn indirectly controlled approximately 70% of the voting power of CVR Energy's common stock as of December 31, 2025, and his interests may conflict with those of the Partnership and its unitholders.

Management's message emphasizes the Partnership's commitment to safe and reliable operations, superior financial performance, and profitable growth, guided by core Values of Safety, Environment, Integrity, Corporate Citizenship, and Continuous Improvement. Management highlights the Partnership's greenhouse gas footprint reduction efforts, including the generation of carbon offset credits from nitrous oxide abatement and carbon oxide sequestration activities, which reduced the CO2e footprint by over 1.3 million metric tons in 2024. Management also emphasizes the Partnership's belief that the long-term fundamentals for the U.S. nitrogen fertilizer industry remain intact despite the volatile business environment. The strategic priorities emphasized include continuing to produce nitrogen fertilizers in an environmentally responsible way, maintaining safe and reliable operations, and pursuing profitable growth through potential acquisitions and expansion projects.