UAN CVR Partners LP

CVR Partners, LP (“CVR Partners” or the “Partnership”) (NYSE: UAN), a manufacturer of ammonia and urea ammonium nitrate (“UAN”) solution fertilizer products, today announced net income of $60 million, or $5.66 per common unit, on net sales of $183 million for the second quarter of 2023, compared to net income of $118 million, or $11.12 per common unit, on net sales of $244 million for the second quarter of 2022. EBITDA was $87 million for the second quarter of 2023, compared to EBITDA of $147 million for the second quarter of 2022.

“CVR Partners achieved solid results for the 2023 second quarter led by strong production, including a combined ammonia production rate of 100 percent offset by lower fertilizer pricing,” said Mark Pytosh, Chief Executive Officer of CVR Partners’ general partner. “The spring planting season went well with favorable weather and strong demand for nitrogen fertilizer.

“As we enter a new planting season, nitrogen fertilizer prices have fully reset and we have seen strong demand for the second half of 2023,” Pytosh said. “Our focus for the remainder of the year will continue to be on safe, reliable operations and maximizing our free cash generation and cash distribution.”

Consolidated Operations

For the second quarter of 2023, CVR Partners’ average realized gate prices for UAN showed a reduction over the prior year, down 43 percent to $316 per ton, and ammonia was down 40 percent over the prior year to $707 per ton. Average realized gate prices for UAN and ammonia were $555 and $1,182 per ton, respectively, for the second quarter of 2022.

CVR Partners’ fertilizer facilities produced a combined 219,000 tons of ammonia during the second quarter of 2023, of which 70,000 net tons were available for sale while the rest was upgraded to other fertilizer products, including 339,000 tons of UAN. In the second quarter of 2022, the fertilizer facilities produced 193,000 tons of ammonia, of which 50,000 net tons were available for sale while the remainder was upgraded to other fertilizer products, including 331,000 tons of UAN. These increases were due to operating reliability after completing the planned turnarounds at both fertilizer facilities during the third quarter of 2022.

Distributions

CVR Partners also announced that on July 31, 2023, the Board of Directors of the Partnership’s general partner (the “Board”) declared a second quarter 2023 cash distribution of $4.14 per common unit, which will be paid on August 21, 2023, to common unitholders of record as of August 14, 2023.

CVR Partners is a variable distribution master limited partnership. As a result, its distributions, if any, will vary from quarter to quarter due to several factors, including, but not limited to, its operating performance, fluctuations in the prices received for its finished products, maintenance capital expenditures, use of cash and cash reserves deemed necessary or appropriate by the Board.

Second Quarter 2023 Earnings Conference Call

CVR Partners previously announced that it will host its second quarter 2023 Earnings Conference Call on Tuesday, August 1, at 11 a.m. Eastern. The Earnings Conference Call may also include discussion of the Partnership’s developments, forward-looking information and other material information about business and financial matters.

The second quarter 2023 Earnings Conference Call will be webcast live and can be accessed on the Investor Relations section of CVR Partners’ website at www.CVRPartners.com. For investors or analysts who want to participate during the call, the dial-in number is (877) 407-8029. The webcast will be archived and available for 14 days at https://edge.media-server.com/mmc/p/o8wcogou. A repeat of the call also can be accessed for 14 days by dialing (877) 660-6853, conference ID 13739749.

Qualified NoticeThis release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of CVR Partners’ distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, CVR Partners’ distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.

Forward-Looking StatementsThis news release contains forward-looking statements. Statements concerning current estimates, expectations and projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that term is defined under the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding future: Partnership results, including the drivers thereof; production and shipment rates; nitrogen fertilizer pricing; planting season impacts; demand for nitrogen fertilizers; ability to maximize free cash generation and cash distributions; net income; net sales; EBITDA and Adjusted EBITDA; realized gate prices for ammonia and UAN; ammonia production levels, including volumes upgraded to other fertilizer products such as UAN, and the drivers thereof; distributions, including the timing, payment and amount (if any) thereof; the Partnership’s cash distribution policy; continued safe and reliable operations; operating performance, operating costs and capital expenditures; Section 45Q credits and future payments arising under the 45Q Transaction (if any), including the amount, timing and receipt thereof; consideration of opportunities to reduce our carbon footprint; timing of turnaround and reliability projects and the impact thereof on operating rates and results; utilization and reliability of our plants, including the impacts thereon; global fertilizer industry conditions, including the drivers thereof; farm economics; cash flow, use of cash and reserves; weather conditions, including the impact thereof on our business; natural gas and global energy costs; risks related to the conclusion of consideration of a spin-off of some or all of the interests CVR Energy owns in the Partnership or potential future reconsideration thereof; and other matters. You can generally identify forward-looking statements by our use of forward-looking terminology such as “outlook,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “should,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. Investors are cautioned that various factors may affect these forward-looking statements, including (among others) the rate of any economic improvement, impacts of the planting season on our business, the health and economic effects of COVID-19 and any variants thereof, general economic and business conditions, political disturbances, geopolitical instability and tensions, and associated changes in global trade policies and economic sanctions, including, but not limited to, in connection with the Russia/Ukraine conflict, and other risks. For additional discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and our other Securities and Exchange Commission (“SEC”) filings. These and other risks may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this news release are made only as of the date hereof. CVR Partners disclaims any intention or obligation to update publicly or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

About CVR Partners, LPHeadquartered in Sugar Land, Texas, CVR Partners, LP is a Delaware limited partnership focused on the production, marketing and distribution of nitrogen fertilizer products. It primarily produces urea ammonium nitrate (UAN) and ammonia, which are predominantly used by farmers to improve the yield and quality of their crops. CVR Partners’ Coffeyville, Kansas, nitrogen fertilizer manufacturing facility includes a 1,300 ton-per-day ammonia unit, a 3,100 ton-per-day UAN unit and a dual-train gasifier complex having a capacity of 89 million standard cubic feet per day of hydrogen. CVR Partners’ East Dubuque, Illinois, nitrogen fertilizer manufacturing facility includes a 1,075 ton-per-day ammonia unit and a 950 ton-per-day UAN unit.

Investors and others should note that CVR Partners may announce material information using SEC filings, press releases, public conference calls, webcasts, and the Investor Relations page of its website. CVR Partners may use these channels to distribute material information about the Partnership and to communicate important information about the Partnership, corporate initiatives and other matters. Information that CVR Partners posts on its website could be deemed material; therefore, CVR Partners encourages investors, the media, its customers, business partners and others interested in the Partnership to review the information posted on its website.

For further information, please contact:

Investor RelationsRichard RobertsCVR Partners, LP (281) 207-3205InvestorRelations@CVRPartners.com

Media RelationsBrandee StephensCVR Partners, LP(281) 207-3516MediaRelations@CVRPartners.com

Non-GAAP Measures

Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our financial information presented in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures are important factors in assessing our operating results and profitability and include the performance and liquidity measures defined below.

The following are non-GAAP measures we present for the period ended June 30, 2023:

EBITDA - Net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense.

Adjusted EBITDA - EBITDA adjusted for certain significant non-cash items and items that management believes are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends.

Reconciliation of Net Cash Provided By Operating Activities to EBITDA - Net cash provided by operating activities reduced by (i) interest expense, net, (ii) income tax expense (benefit), (iii) change in working capital, and (iv) other non-cash adjustments.

Available Cash for Distribution - EBITDA for the quarter excluding non-cash income or expense items (if any), for which adjustment is deemed necessary or appropriate by the Board in its sole discretion, less (i) reserves for maintenance capital expenditures, debt service and other contractual obligations, and (ii) reserves for future operating or capital needs (if any), in each case, that the Board deems necessary or appropriate in its sole discretion. Available cash for distribution may be increased by the release of previously established cash reserves, if any, and other excess cash, at the discretion of the Board.

We present these measures because we believe they may help investors, analysts, lenders, and ratings agencies analyze our results of operations and liquidity in conjunction with our GAAP results, including, but not limited to, our operating performance as compared to other publicly traded companies in the fertilizer industry, without regard to historical cost basis or financing methods, and our ability to incur and service debt and fund capital expenditures. Non-GAAP measures have important limitations as analytical tools because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable GAAP financial measures. Refer to the “Non-GAAP Reconciliations” included herein for reconciliation of these amounts. Due to rounding, numbers presented within this section may not add or equal to numbers or totals presented elsewhere within this document.

CVR Partners, LP(all information in this release is unaudited)

Consolidated Statement of Operations Data

	Three Months Ended June 30,								Six Months Ended June 30,
(in thousands, except per unit data)	2023				2022				2023				2022
Net sales(1)	$	183,005			$	244,000			$	409,266			$	466,874
Operating costs and expenses:
Cost of materials and other		33,410				40,984				69,989				71,230
Direct operating expenses (exclusive of depreciation and amortization)		55,759				48,767				113,303				109,084
Depreciation and amortization		19,755				21,220				34,965				40,686
Cost of sales		108,924				110,971				218,257				221,000
Selling, general and administrative expenses		7,291				7,008				14,675				15,752
Loss on asset disposal		64				93				256				267
Operating income		66,726				125,928				176,078				229,855
Other (expense) income:
Interest expense, net		(6,919	)			(8,308	)			(14,093	)			(18,343	)
Other income (expense), net		52				81				(212	)			108
Income before income tax expense		59,859				117,701				161,773				211,620
Income tax expense		2				119				46				377
Net income	$	59,857			$	117,582			$	161,727			$	211,243
Basic and diluted earnings per common unit	$	5.66			$	11.12			$	15.30			$	19.90
Distributions declared per common unit		10.43				2.26				20.93				7.50
EBITDA*	$	86,533			$	147,229			$	210,831			$	270,649
Available Cash for Distribution*		43,778				106,206				154,071				130,041
Weighted-average common units outstanding:
Basic and Diluted		10,570				10,570				10,570				10,617

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* See “Non-GAAP Reconciliations” section below for a reconciliation of these amounts.

(1)   Below are the components of net sales:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2023			2022			2023			2022
Components of net sales:
Fertilizer sales	$	167,006		$	230,885		$	377,018		$	441,726
Freight in revenue		10,910			9,856			21,846			19,071
Other		5,089			3,259			10,402			6,077
Total net sales	$	183,005		$	244,000		$	409,266		$	466,874

Selected Balance Sheet Data

(in thousands)	June 30, 2023			December 31, 2022
Cash and cash equivalents	$	68,699		$	86,339
Working capital		120,009			139,647
Total assets		1,018,990			1,100,402
Total debt, including current portion		547,050			546,800
Total liabilities		666,674			688,591
Total partners’ capital		352,316			411,811

Selected Cash Flow Data

	Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	2023				2022				2023				2022
Net cash flow provided by (used in):
Operating activities	$	60,844			$	48,684			$	191,287			$	215,611
Investing activities		(3,268	)			(5,831	)			12,294				(13,730	)
Financing activities		(110,240	)			(23,888	)			(221,221	)			(158,085	)
Net (decrease) increase in cash and cash equivalents	$	(52,664	)		$	18,965			$	(17,640	)		$	43,796

Capital Expenditures

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2023			2022			2023			2022
Maintenance	$	5,691		$	7,981		$	9,191		$	13,109
Growth		598			32			623			553
Total capital expenditures	$	6,289		$	8,013		$	9,814		$	13,662

Key Operating Data

Ammonia Utilization(1)
	Three Months Ended June 30,						Six Months Ended June 30,
(percent of capacity utilization)	2023			2022			2023			2022
Consolidated	100	%		89	%		103	%		88	%

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(1)   Reflects our ammonia utilization rates on a consolidated basis and at each of our facilities. Utilization is an important measure used by management to assess operational output at each of the Partnership’s facilities. Utilization is calculated as actual tons produced divided by capacity. We present our utilization for the three and six months ended June 30, 2023 and 2022 and take into account the impact of our current turnaround cycles on any specific period. Additionally, we present utilization solely on ammonia production rather than each nitrogen product as it provides a comparative baseline against industry peers and eliminates the disparity of plant configurations for upgrade of ammonia into other nitrogen products. With our efforts being primarily focused on ammonia upgrade capabilities, this measure provides a meaningful view of how well we operate.Sales and Production Data

	Three Months EndedJune 30,						Six Months EndedJune 30,
	2023			2022			2023			2022
Consolidated sales (thousand tons):
Ammonia		79			52			121			91
UAN		329			287			688			609
Consolidated product pricing at gate (dollars per ton):(1)
Ammonia	$	707		$	1,182		$	770		$	1,127
UAN		316			555			390			524
Consolidated production volume (thousand tons):
Ammonia (gross produced)(2)		219			193			442			380
Ammonia (net available for sale)(2)		70			50			132			102
UAN		339			331			705			648
Feedstock:
Petroleum coke used in production (thousand of tons)		124			116			255			224
Petroleum coke used in production (dollars per ton)	$	73.91		$	49.91		$	75.62		$	53.06
Natural gas used in production (thousands of MMBtu)(3)		2,194			1,936			4,296			3,697
Natural gas used in production (dollars per MMBtu)(3)	$	2.35		$	7.34		$	4.02		$	6.48
Natural gas in cost of materials and other (thousands of MMBtu)(3)		2,403			1,707			3,718			3,235
Natural gas in cost of materials and other (dollars per MMBtu)(3)	$	4.11		$	5.98		$	5.41		$	5.81

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(1) Product pricing at gate represents sales less freight revenue divided by product sales volume in tons and is shown in order to provide a pricing measure that is comparable across the fertilizer industry.(2) Gross tons produced for ammonia represent total ammonia produced, including ammonia produced that was upgraded into other fertilizer products. Net tons available for sale represent ammonia available for sale that was not upgraded into other fertilizer products.(3) The feedstock natural gas shown above does not include natural gas used for fuel. The cost of fuel natural gas is included in direct operating expense.Key Market Indicators

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Ammonia — Southern plains (dollars per ton)	$	435		$	1,241		$	586		$	1,259
Ammonia — Corn belt (dollars per ton)		472			1,405			682			1,391
UAN — Corn belt (dollars per ton)		298			632			335			624
Natural gas NYMEX (dollars per MMBtu)	$	2.33		$	7.49		$	2.54		$	6.06

Q3 2023 Outlook

The table below summarizes our outlook for certain operational statistics and financial information for the third quarter of 2023. See “Forward-Looking Statements” above.

	Q3 2023
	Low				High
Ammonia utilization rates
Consolidated		95	%			100	%
Coffeyville Facility		95	%			100	%
East Dubuque Facility		95	%			100	%
Direct operating expenses (in millions)(1)	$	50			$	55
Capital expenditures (in millions)(2)	$	14			$	16

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(1) Direct operating expenses are shown exclusive of depreciation and amortization, turnaround expenses, and impacts of inventory adjustments.(2) Capital expenditures are disclosed on an accrual basis.

Non-GAAP Reconciliations:

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2023			2022			2023			2022
Net income	$	59,857		$	117,582		$	161,727		$	211,243
Interest expense, net		6,919			8,308			14,093			18,343
Income tax expense		2			119			46			377
Depreciation and amortization		19,755			21,220			34,965			40,686
EBITDA and Adjusted EBITDA	$	86,533		$	147,229		$	210,831		$	270,649

Reconciliation of Net Cash Provided By Operating Activities to EBITDA and Adjusted EBITDA

	Three Months EndedJune 30,								Six Months EndedJune 30,
(in thousands)	2023				2022				2023				2022
Net cash provided by operating activities	$	60,844			$	48,684			$	191,287			$	215,611
Non-cash items:
Loss on extinguishment of debt		—				—				—				(628	)
Share-based compensation		(2,203	)			721				(4,136	)			(11,353	)
Other		(250	)			(345	)			(752	)			(958	)
Adjustments:
Interest expense, net		6,919				8,308				14,093				18,343
Income tax expense		2				119				46				377
Change in assets and liabilities		21,221				89,742				10,293				49,257
EBITDA and Adjusted EBITDA	$	86,533			$	147,229			$	210,831			$	270,649

Reconciliation of EBITDA to Available Cash for Distribution

	Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	2023				2022				2023				2022
EBITDA	$	86,533			$	147,229			$	210,831			$	270,649
Current (reserves) adjustments for amounts related to:
Net cash interest expense (excluding capitalized interest)		(8,466	)			(8,466	)			(16,932	)			(17,800	)
Debt service		—				—				—				(65,000	)
Financing fees		—				—				—				(815	)
Maintenance capital expenditures		(5,691	)			(7,981	)			(9,191	)			(13,109	)
Utility pass-through		(675	)			(675	)			(1,350	)			(1,350	)
Major scheduled expenditures		662				—				662				—
Common units repurchased		—				—				—				(12,397	)
Net cash proceeds from the 45Q Transaction		(701	)			—				17,351				—
Other (reserves) releases:
Future turnaround		(3,334	)			(9,875	)			(6,500	)			(16,750	)
Cash reserves for future operating needs		(20,000	)			(15,000	)			(20,000	)			(15,000	)
Reserve for maintenance capital expenditures		(4,550	)			974				(20,800	)			1,613
Available Cash for distribution(1) (2)	$	43,778			$	106,206			$	154,071			$	130,041
Common units outstanding		10,570				10,570				10,570				10,570

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(1) Amount represents the cumulative available cash based on quarter-to-date and year-to-date results. However, available cash for distribution is calculated quarterly, with distributions (if any) being paid in the period following declaration.(2) The Partnership declared and paid a $10.50 and $10.43 cash distribution related to the fourth quarter of 2022 and first quarter of 2023, respectively, and declared a cash distribution of $4.14 per common unit related to the second quarter of 2023 to be paid in August 2023.