cvi-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	September 30, 2024
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to .

Commission file number: 001-35120

CVR PARTNERS, LP

(Exact name of registrant as specified in its charter)

Delaware

56-2677689

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

2277 Plaza Drive, Suite 500, Sugar Land, Texas 77479

(Address of principal executive offices) (Zip Code)

(281) 207-3200

(Registrant’s telephone number, including area code)

_____________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common units representing limited partner interests	UAN	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 10,569,637 common units representing limited partner interests of CVR Partners, LP (“common units”) outstanding at October 25, 2024.

Table of Contents

TABLE OF CONTENTS

CVR PARTNERS, LP - Quarterly Report on Form 10-Q

September 30, 2024

PART I. Financial Information

PART II. Other Information

Condensed Con solidate d Balance Sheets - September 30, 2024 and December 31, 2023 (unaudited)

Item 1A.

Risk Factors

Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

Item 5.

Other Information

Condensed Consolidated Statements of Partners’ Capital - Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

Item 6.

Exhibits

Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2024 and 2023 (unaudited)

Signatures

Notes to the Condensed Consolidated Financial Statements (unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

This Quarterly Report on Form 10-Q (including documents incorporated by reference herein) contains statements with respect to our expectations or beliefs as to future events. These types of statements are “forward-looking” and subject to uncertainties. See “Important Information Regarding Forward-Looking Statements” section of this filing.

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Important Information Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, but not limited to, those under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements other than statements of historical fact, including without limitation, statements regarding future operations, financial position, estimated revenues and losses, growth, capital projects, unit repurchases, impacts of legal proceedings, projected costs, prospects, plans, and objectives of management are forward-looking statements. The words “could”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “may”, “continue”, “predict”, “potential”, “project”, and similar terms and phrases are intended to identify forward-looking statements.

Although we believe our assumptions concerning future events are reasonable, a number of risks, uncertainties and other factors could cause actual results and trends to differ materially from those projected or forward-looking. Forward-looking statements, as well as certain risks, contingencies, or uncertainties that may impact our forward-looking statements, include, but are not limited to, the following:

•our ability to generate distributable cash or make cash distributions on our common units, including reserves and future uses of cash;

•the ability of our general partner to modify or revoke our distribution policy at any time;

•the volatile, cyclical, and seasonal nature of our business and the variable nature of our distributions;

•the effects of changes in market conditions; market volatility; fertilizer, natural gas, and other commodity prices; inflation, and the impact of such changes on our operating results and financial condition;

•the impact of weather on our business, including our ability to produce, market, sell, transport or deliver fertilizer products profitably or at all, and on commodity supply and/or pricing;

•the dependence of our operations on a few third-party suppliers, including providers of feedstocks, transportation services, and equipment;

•our reliance on, or our ability to procure economically or at all, petroleum coke (“pet coke”) we purchase from subsidiaries of CVR Energy, Inc. (together with its subsidiaries, but excluding the Partnership and its subsidiaries, “CVR Energy”) and other third-party suppliers;

•our reliance on the natural gas, electricity, oxygen, nitrogen, sulfur processing, compressed dry air and other products that we purchase from third parties;

•the supply, availability, and prices of raw materials and the effects of inflation thereupon;

•our production levels, including the risk of a material decline in those levels and/or our ability to upgrade ammonia to UAN;

•product pricing, including spot and contracted sales, the timing thereof, and our ability to realize market prices, in full or at all;

•accidents or other unscheduled shutdowns or interruptions affecting our facilities, machinery, people, or equipment, or those of our suppliers or customers;

•potential operating hazards from accidents, fire, severe weather, tornadoes, floods or other natural disasters;

•operational upsets or changes in laws that could impact our ability to qualify for, the amount of, and/or the receipt of credits (if any) under Section 45Q of the Internal Revenue Code of 1986, as amended;

•our ability to meet certain carbon oxide capture and sequestration milestones;

•our ability to obtain, retain, or renew permits, licenses (including technology licenses) and authorizations to operate our business;

•competition in the nitrogen fertilizer business and foreign wheat and coarse grain production, including impacts thereof as a result of farm planting acreage, domestic and global supply and demand, and domestic or international duties, tariffs, or other factors;

•changes in our credit profile and the effects of higher interest rates and/or restrictions in our current or future debt agreements;

•existing and future laws, rulings and regulations, or amplification thereof, including but not limited to those relating to the environment, climate change, and/or the transportation or production of hazardous chemicals, materials, or substances, like ammonia, including potential liabilities or capital requirements arising from such laws, rulings, or regulations and our expectations concerning the impacts of such laws, regulations or rulings on macroeconomic factors, including consumer activity;

•political uncertainty in light of the upcoming November 2024 United States presidential election and impacts to the oil and gas industry and the United States economy generally as a result of actions taken by a new administration;

•erosion of demand for our products due to or other impacts of climate change and environmental, social and governance initiatives or other factors, whether from regulators, rating agencies, lenders, investors, litigants, customers, vendors, the public or others;

•alternative energy or fuel sources and impacts on corn prices (ethanol), and the end-use and application of fertilizers;

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•risks of terrorism, cybersecurity attacks, the security of chemical manufacturing facilities and other matters beyond our control;

•political disturbances, geopolitical conflicts, instability (including but not limited to volatility in the capital, credit and commodities markets and in the global economy) and tensions, and associated changes in global trade policies and economic sanctions, including, but not limited to, in connection with the Russia-Ukraine war and the conflict in the Middle East and any continued spread or expansion thereof, and any other ongoing or potential global or regional conflicts;

•our lack of asset diversification;

•our dependence on significant customers and the creditworthiness and performance by counterparties;

•our potential loss of transportation cost advantage over our competitors;

•risks associated with third-party operation of or control over important facilities necessary for operation of our nitrogen fertilizer facilities;

•the volatile nature of ammonia, potential liability for accidents involving ammonia including damage or injury to persons, property, the environment or human health and increased costs related to the transport or production of ammonia;

•our potential inability to successfully implement our business strategies, including the completion of significant capital programs or projects;

•our reliance on CVR Energy’s management team and conflicts of interest they may face operating each of CVR Partners and CVR Energy;

•control of our general partner by CVR Energy and control of CVR Energy by its controlling shareholder, including but not limited to competition, transactions, and/or conflicts with CVR Energy and its affiliates;

•the potential inability to successfully implement our business strategies at all or on time and within our anticipated budgets, including significant capital programs or projects and turnarounds at our fertilizer facilities and the costs thereof;

•asset useful lives and impairments and impacts thereof;

•realizable inventory value;

•the number of investors willing to hold or acquire our common units;

•our ability to issue securities or obtain financing at favorable rates or at all;

•bank failures or other events affecting financial institutions;

•changes in tax and other law, regulations and policies;

•impact of potential runoff of water containing nitrogen based fertilizer into waterways and regulatory or legal actions in response thereto;

•changes in our treatment as a partnership for U.S. federal income or state tax purposes;

•rulings, judgments or settlements in litigation, tax or other legal or regulatory matters;

•risks related to potential strategic transactions involving the Partnership or interests therein in which CVR Energy and its controlling shareholder or others may participate;

•the cost and value of payouts under our equity and non-equity incentive plans;

•the cost and/or availability of insurance and our ability to recover under our insurance policies for damages or losses in full or at all;

•labor supply shortages, labor difficulties, labor disputes or strikes; and

•the factors described in greater detail under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and our other filings with the U.S. Securities and Exchange Commission (“SEC”).

All forward-looking statements included in this Report are based on information available to us on the date of this Report. Except as required by law, we undertake no obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise.

Information About Us

Investors should note that we make available, free of charge on our website at www.CVRPartners.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent news releases. We may use the Investor Relations section of our website to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. Documents and information on our website are not incorporated by reference herein.

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CVR PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in thousands)	September 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	110,539	$	45,279
Accounts receivable, net	36,007		41,893
Inventories	75,302		69,165
Prepaid expenses	3,956		8,078
Other current assets	821		1,454
Total current assets	226,625		165,869
Property, plant, and equipment, net	714,987		761,023


Other long-term assets	45,014		48,440
Total assets	$	986,626	$	975,332

LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable	$	29,379	$	33,486
Accounts payable to affiliates	4,680		5,319
Deferred revenue	39,340		15,796
Other current liabilities	31,785		20,872
Total current liabilities	105,184		75,473
Long-term liabilities:
Long-term debt, net	547,710		547,308
Long-term deferred revenue	28,552		33,311
Other long-term liabilities	17,828		16,360
Total long-term liabilities	594,090		596,979
Commitments and contingencies (See Note 11)
Partners’ capital:
Common unitholders, 10,569,637 and 10,569,637 units issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	287,351		302,879
General partner interest	1		1
Total partners’ capital	287,352		302,880
Total liabilities and partners’ capital	$	986,626	$	975,332

The accompanying notes are an integral part of these condensed consolidated financial statements.

September 30, 2024 | 5

CVR PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per unit data)	2024		2023		2024		2023
Net sales	$	125,203	$	130,592	$	385,769	$	539,858
Operating costs and expenses:
Cost of materials and other	26,263		31,004		77,704		100,993
Direct operating expenses (exclusive of depreciation and amortization)	55,761		58,459		158,300		171,761
Depreciation and amortization	24,732		24,119		64,063		59,084
Cost of sales	106,756		113,582		300,067		331,838
Selling, general and administrative expenses	7,447		7,805		21,065		22,479
Loss on asset disposal	4		1,067		17		1,324

Operating income	10,996		8,138		64,620		184,217
Other (expense) income:
Interest expense, net	(7,241)		(7,501)		(22,416)		(21,594)

Other income (expense), net	52		125		376		(88)
Income before income tax expense	3,807		762		42,580		162,535
Income tax expense (benefit)	—		31		(25)		77
Net income	$	3,807	$	731	$	42,605	$	162,458

Basic and diluted earnings per common unit	$	0.36	$	0.07	$	4.03	$	15.37


Weighted-average common units outstanding:
Basic and Diluted	10,570		10,570		10,570		10,570

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CVR PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(unaudited)


	Common Units			General Partner Interest		Total Partners’ Capital
(in thousands, except unit data)	Issued	Amount
Balance at December 31, 2023	10,569,637	$	302,879	$	1	$	302,880
Net income	—	12,579		—		12,579

Cash distributions to common unitholders - Affiliates	—	(6,539)		—		(6,539)
Cash distributions to common unitholders - Non-affiliates	—	(11,218)		—		(11,218)

Balance at March 31, 2024	10,569,637	297,701		1		297,702
Net income	—	26,219		—		26,219

Cash distributions to common unitholders - Affiliates	—	(7,472)		—		(7,472)
Cash distributions to common unitholders - Non-affiliates	—	(12,821)		—		(12,821)
Balance at June 30, 2024	10,569,637	303,627		1		303,628
Net income	—	3,807		—		3,807
Cash distributions to common unitholders - Affiliates	—	(7,395)		—		(7,395)
Cash distributions to common unitholders - Non-affiliates	—	(12,688)		—		(12,688)

Balance at September 30, 2024	10,569,637	$	287,351	$	1	$	287,352


	Common Units			General Partner Interest		Total Partners’ Capital
(in thousands, except unit data)	Issued	Amount
Balance at December 31, 2022	10,569,637	$	411,810	$	1	$	411,811
Net income	—	101,870		—		101,870

Cash distributions to common unitholders - Affiliates	—	(40,866)		—		(40,866)
Cash distributions to common unitholders - Non-affiliates	—	(70,115)		—		(70,115)
Balance at March 31, 2023	10,569,637	402,699		1		402,700
Net income	—	59,857		—		59,857

Cash distributions to common unitholders - Affiliates	—	(40,594)		—		(40,594)
Cash distributions to common unitholders - Non-affiliates	—	(69,647)		—		(69,647)
Balance at June 30, 2023	10,569,637	352,315		1		352,316
Net income	—	731		—		731
Cash distributions to common unitholders - Affiliates	—	(16,113)		—		(16,113)
Cash distributions to common unitholders - Non-affiliates	—	(27,646)		—		(27,646)

Balance at September 30, 2023	10,569,637	$	309,287	$	1	$	309,288

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CVR PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended September 30,
(in thousands)	2024		2023
Cash flows from operating activities:
Net income	$	42,605	$	162,458
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	64,063		59,084

Share-based compensation	3,416		7,966

Other adjustments	506		2,008
Change in assets and liabilities:
Current assets and liabilities	27,060		29,158
Non-current assets and liabilities	100		715
Net cash provided by operating activities	137,750		261,389
Cash flows from investing activities:
Capital expenditures	(18,728)		(13,744)

Return of equity method investment	4,371		20,672
Net cash (used in) provided by investing activities	(14,357)		6,928
Cash flows from financing activities:




Cash distributions to common unitholders - Affiliates	(21,406)		(97,572)
Cash distributions to common unitholders - Non-affiliates	(36,727)		(167,408)
Payment of deferred financing costs	—		(501)

Net cash used in financing activities	(58,133)		(265,481)
Net increase in cash and cash equivalents	65,260		2,836
Cash and cash equivalents, beginning of period	45,279		86,339
Cash and cash equivalents, end of period	$	110,539	$	89,175

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CVR PARTNERS, LP AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) Organization and Nature of Business

CVR Partners, LP (“CVR Partners” or the “Partnership”) is a Delaware limited partnership formed by CVR Energy, Inc. (together with its subsidiaries, but excluding the Partnership and its subsidiaries, “CVR Energy”) to own, operate and grow its nitrogen fertilizer business. The Partnership produces nitrogen fertilizer products at two manufacturing facilities, one located in Coffeyville, Kansas operated by our wholly owned subsidiary, Coffeyville Resources Nitrogen Fertilizers, LLC (“CRNF”) (the “Coffeyville Facility”) and one located in East Dubuque, Illinois operated by our wholly owned subsidiary, East Dubuque Nitrogen Fertilizers, LLC (“EDNF”) (the “East Dubuque Facility”). Both facilities manufacture ammonia and are able to further upgrade such ammonia to other nitrogen fertilizer products, principally urea ammonium nitrate (“UAN”). Nitrogen fertilizer is used by farmers to improve the yield and quality of their crops, primarily corn and wheat. The Partnership’s products are sold on a wholesale basis in the United States of America. As used in these financial statements, references to CVR Partners, the Partnership, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Partners or one or both of the facilities, as the context may require.

Interest Holders

As of September 30, 2024, public common unitholders held approximately 63% of the Partnership’s outstanding limited partner interests; CVR Services, LLC (“CVR Services”), a wholly owned subsidiary of CVR Energy, held the remaining approximately 37% of the Partnership’s outstanding limited partner interests; and CVR GP, LLC (the “General Partner”), a wholly owned subsidiary of CVR Energy, held 100% of the Partnership’s general partner interest. As of September 30, 2024, Icahn Enterprises L.P. and its affiliates owned approximately 66% of the common stock of CVR Energy.

Management and Operations

The Partnership, including the General Partner, is managed by a combination of the Board, the General Partner’s executive officers, CVR Services (as sole member of the General Partner), and certain officers of CVR Energy and its subsidiaries, pursuant to the Partnership Agreement, as well as a number of agreements among the Partnership, the General Partner, CVR Energy, and certain of their respective subsidiaries, including certain services agreements. See Part II, Item 8 of CVR Partners’ Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) for further discussion. Common unitholders have limited voting rights on matters affecting the Partnership and have no right to elect the General Partner’s directors or officers, whether on an annual or continuing basis or otherwise.

Subsequent Events

The Partnership evaluated subsequent events, if any, that would require an adjustment to the Partnership’s condensed consolidated financial statements or require disclosure in the notes to the condensed consolidated financial statements through the date of issuance of these condensed consolidated financial statements. Where applicable, the notes to these condensed consolidated financial statements have been updated to discuss all significant subsequent events which have occurred.

(2) Basis of Presentation

The accompanying condensed consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), include the accounts of CVR Partners and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. Certain notes and other information have been condensed or omitted from these condensed consolidated financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the December 31, 2023 audited consolidated financial statements and notes thereto included in the 2023 Form 10-K.

In the opinion of the Partnership’s management, the accompanying condensed consolidated financial statements reflect all adjustments that are necessary for fair presentation of the financial position and results of operations of the Partnership for the periods presented. Such adjustments are of a normal recurring nature, unless otherwise disclosed.

The condensed consolidated financial statements are prepared in conformity with GAAP, which requires management to make certain estimates and assumptions that affect the reported amounts and disclosure of assets and liabilities at the date of the

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CVR PARTNERS, LP AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Results of operations and cash flows for the interim periods presented are not necessarily indicative of the results that will be realized for the year ending December 31, 2024 or any other interim or annual period.

Recent Accounting Pronouncements - Accounting Standards Issued But Not Yet Implemented

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires enhanced income tax disclosures that reflect how operations and related tax risks, as well as how tax planning and operational opportunities, affect the tax rate and prospects for future cash flows. This standard is effective for the Partnership’s annual reporting beginning January 1, 2025 with early adoption permitted. While the Partnership does not expect adoption will have a material impact on its consolidated financial statements, it currently expects additional disclosures will be included for its annual and interim reporting periods beginning December 31, 2025. The Partnership does not intend to early adopt this ASU.

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which includes requirements for more robust disclosures about significant segment expenses and information used in assessing segment performance on an annual and interim basis. The guidance also requires that a public entity that has a single reportable segment provide all the disclosures required by the guidance and all existing segment disclosures under the FASB Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting. This standard is effective for the Partnership’s annual period beginning January 1, 2024 and interim periods beginning January 1, 2025 and should be applied retrospectively to all comparative periods. While the Partnership continues to evaluate the effects of adopting this new accounting guidance, it currently expects additional disclosures will be included for its annual and interim reporting periods beginning December 31, 2024.

(3) Inventories

Inventories consisted of the following:


(in thousands)	September 30, 2024		December 31, 2023
Finished goods	$	20,111	$	15,015
Raw materials	2,105		2,472
Parts, supplies and other	53,086		51,678
Total inventories	$	75,302	$	69,165

(4) Property, Plant, and Equipment

Property, plant, and equipment consisted of the following:


(in thousands)	September 30, 2024		December 31, 2023
Machinery and equipment	$	1,457,492	$	1,446,728
Buildings and improvements	18,193		18,193
Automotive equipment	16,119		16,208
Land and improvements	14,959		14,959


Construction in progress	23,740		19,075
Other	2,916		2,758
	1,533,419		1,517,921
Less: Accumulated depreciation and amortization	(818,432)		(756,898)
Total property, plant, and equipment, net	$	714,987	$	761,023

For the three and nine months ended September 30, 2024, depreciation and amortization expense related to property, plant, and equipment was $24.5 million and $63.3 million, respectively, which includes $4.9 million and $10.6 million, respectively, of additional depreciation expense, which resulted from the Partnership updating the estimated useful lives of certain assets due to planned asset retirements, including granular urea production assets, compared to $23.9 million and $58.5 million for the three and nine months ended September 30, 2023, respectively.

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CVR PARTNERS, LP AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

For the three and nine months ended September 30, 2024, capitalized interest was $0.2 million and $0.7 million, respectively, compared to $0.2 million and $0.4 million for the three and nine months ended September 30, 2023, respectively.

(5) Equity Method Investment

As part of a series of agreements entered into with unaffiliated parties in January 2023 with the objective to monetize certain tax credits under Section 45Q of the Internal Revenue Code of 1986 (“45Q Transaction”), the Partnership received a 50% interest in CVR-CapturePoint Parent, LLC (“CVRP JV”) in connection with a modification to a carbon oxide contract (“CO Contract”) with a customer. The Partnership applied the variable interest entity (“VIE”) model under FASB ASC Topic 810, Consolidation, to its variable interest in CVRP JV and determined that CVRP JV is a VIE. While the Partnership concluded it is not the primary beneficiary of CVRP JV, it does have significant influence over CVRP JV’s operating and financial policies and, therefore, applied the equity method of accounting for its investment in CVRP JV.

The Partnership valued the equity interest received using a combination of the market approach and the discounted cash flow methodology with key inputs including the discount rate, contractual and expected future cash flows, and market multiples. The fair value of the consideration received, which was a non-recurring Level 3 measurement as defined by FASB ASC Topic 820, Fair Value Measurements, was estimated to be $46.0 million in January 2023 based on the use of the Partnership’s own assumptions described above.

The Partnership deferred the recognition of the noncash consideration received at inception and has been recognizing the associated revenue proportionally as the performance obligations associated with the CO Contract are satisfied. Refer to Note 9 (“Revenue”) for further discussion. The Partnership has elected to record its share of the earnings or loss of CVRP JV one quarter in arrears. Distributions received from CVRP JV will reduce the Partnership’s equity method investment and will be recorded in the period they are received. The investment in CVRP JV is presented within Other long-term assets on our Condensed Consolidated Balance Sheets:


(in thousands)	CVRP JV
Balance at December 31, 2023	$	24,518
Cash contributions	3
Cash distributions (1)	(2,781)
Equity loss	(1)

Balance at March 31, 2024	21,739
Cash contributions	4
Cash distributions	(757)
Equity loss	(3)
Balance at June 30, 2024	20,983
Cash distributions	(840)
Equity loss	(4)
Balance at September 30, 2024	$	20,139

(1)Includes a $2.2 million distribution to the Partnership for CVRP JV exceeding certain carbon oxide capture and sequestration milestones during 2023.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(6) Leases

Balance Sheet Summary as of September 30, 2024 and December 31, 2023

The following table summarizes the right-of-use (“ROU”) asset and lease liability balances for the Partnership’s operating leases at September 30, 2024 and December 31, 2023:


(in thousands)	September 30, 2024		December 31, 2023
ROU asset, net

Railcars	$	13,675	$	12,032
Real estate and other	1,871		2,007
Lease liability

Railcars	13,597		12,032
Real estate and other	264		268

Lease Expense Summary for the Three and Nine Months Ended September 30, 2024 and 2023

We recognize operating lease expense on a straight-line basis over the lease term within Direct operating expenses (exclusive of depreciation and amortization) and Cost of materials and other. For the three and nine months ended September 30, 2024 and 2023, we recognized lease expense comprised of the following components:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Operating lease expense	$	1,450	$	1,100	$	4,026	$	3,466



Short-term lease expense	684		1,031		2,186		2,300

Lease Commitments Not Yet Commenced

CRNF is party to an On-Site Product Supply Agreement with Messer LLC. Based on terms outlined in this agreement, the Partnership expects this contract to be recorded as a finance lease with approximately $21 million being capitalized upon lease commencement when the asset is placed in service, which is currently expected to occur in the fourth quarter of 2024. Refer to Part II, Item 8, Note 6 (“Leases”) of our 2023 Form 10-K for further information.

(7) Other Current Liabilities

Other current liabilities consisted of the following:


(in thousands)	September 30, 2024		December 31, 2023
Accrued interest	$	9,826	$	1,404
Personnel accruals	9,234		8,404
Operating lease liabilities	3,830		3,176
Share-based compensation	2,466		1,195
Accrued taxes other than income taxes	2,113		1,825
Sales incentives	553		1,585

Other accrued expenses and liabilities	3,763		3,283
Total other current liabilities	$	31,785	$	20,872

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(8) Long-Term Debt

Long-term debt consists of the following:


(in thousands)	September 30, 2024		December 31, 2023
6.125% Senior Secured Notes, due June 2028 (1)	$	550,000	$	550,000

Unamortized debt issuance costs	(2,290)		(2,692)
Total long-term debt	$	547,710	$	547,308

(1)The 6.125% Senior Secured Notes, due June 2028 had an estimated fair value of $537.9 million and $513.1 million as of September 30, 2024 and December 31, 2023, respectively. The fair value estimate is a Level 2 measurement, as defined by FASB ASC Topic 820, Fair Value Measurements, as it was determined by quotations obtained from a broker-dealer who makes a market in these and similar securities.

Credit Agreements



(in thousands)	Total Available Borrowing Capacity		Amount Borrowed as of September 30, 2024		Outstanding Letters of Credit		Available Capacity as of September 30, 2024		Maturity Date
ABL Credit Facility	$	39,317	$	—	$	—	$	39,317	September 26, 2028

Covenant Compliance

The Partnership and its subsidiaries were in compliance with all covenants under their respective debt instruments as of September 30, 2024.

(9) Revenue

The following table presents the Partnership’s revenue, disaggregated by major products:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Ammonia	$	24,614	$	22,471	$	83,875	$	116,002
UAN	76,735		86,310		241,080		354,425
Urea products	8,137		7,723		21,635		23,094
Net sales, exclusive of freight and other	109,486		116,504		346,590		493,521
Freight revenue (1)	11,321		9,909		26,914		31,755
Other revenue (2)	4,396		4,179		12,265		14,582
Total revenue	$	125,203	$	130,592	$	385,769	$	539,858

(1)Freight revenue recognized by the Partnership represents the pass-through finished goods delivery costs incurred prior to customer acceptance and are reimbursed by customers. An offsetting expense for freight is included in Cost of materials and other.

(2)Includes revenue from (i) nitric acid sales and (ii) carbon oxide sales, including sales made in connection with the 45Q Transaction and the noncash consideration received, which is recognized as the performance obligation associated with the CO Contract is satisfied over its term through April 2030. Revenue, if any, from the CO Contract is recognized over time based on carbon oxide volumes measured at delivery.

Remaining Performance Obligations

We have spot and term contracts with customers and the transaction prices are either fixed or based on market indices (variable consideration). We do not disclose remaining performance obligations for contracts that have terms of one year or less and for contracts where the variable consideration was entirely allocated to an unsatisfied performance obligation.

As of September 30, 2024, the Partnership had approximately $8.6 million of remaining performance obligations for contracts with an original expected duration of more than one year. The Partnership expects to recognize $0.9 million of these

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

performance obligations as revenue by the end of 2024, $4.1 million in 2025, an additional $3.2 million in 2026, and the remaining balance in 2027.

Contract Balances

During the nine months ended September 30, 2024 and 2023, the Partnership recognized revenue of $14.1 million and $46.4 million, respectively, that was included in the deferred revenue balances as of December 31, 2023 and December 31, 2022, respectively.

(10) Share-Based Compensation

A summary of compensation expense for the three and nine months ended September 30, 2024 and 2023 is presented below:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Phantom Unit Awards	$	447	$	2,250	$	2,105	$	4,715
Other Awards (1)	267		1,580		1,311		3,251
Total share-based compensation expense	$	714	$	3,830	$	3,416	$	7,966

(1)Other awards include the allocations, pursuant to the Corporate Master Services Agreement effective January 1, 2020, as amended (the “Corporate MSA”) and the Partnership’s Second Amended and Restated Agreement of Limited Partnership, of compensation expense for certain employees of CVR Energy and its subsidiaries who perform services for the Partnership and participate in equity compensation plans of CVR Energy.

(11) Commitments and Contingencies

There have been no material changes in the Partnership’s commitments and contingencies to those disclosed in the 2023 Form 10-K and in the Forms 10-Q for the periods ended March 31, 2024 and June 30, 2024. In the ordinary course of business, the Partnership may become party to lawsuits, administrative proceedings, and governmental investigations, including environmental, regulatory, and other matters. The outcome of these matters cannot always be predicted accurately, but the Partnership accrues liabilities for these matters if the Partnership has determined that it is probable a loss has been incurred and the loss can be reasonably estimated. While it is not possible to predict the outcome of such proceedings, if one or more of them were decided against us, the Partnership believes there would be no material impact to its consolidated financial statements.

45Q Transaction

Under the agreements entered into in connection with the 45Q Transaction, the Partnership’s subsidiary, CRNF, is obligated to meet certain minimum quantities of carbon oxide supply each year during the term of the agreement and is subject to fees of up to $15.0 million per year (reduced pro rata for partial years) to the unaffiliated third-party investors, subject to an overall $45.0 million cap, if these minimum quantities are not delivered. The Partnership issued a guarantee to the unaffiliated third-party investors and certain of their affiliates involved in the 45Q Transaction of the payment and performance obligations of CRNF and CVRP JV, which include the aforementioned fees. This guarantee has no impacts on the accounting records of the Partnership unless the parties fail to comply with the terms of the 45Q Transaction contracts.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(12) Supplemental Cash Flow Information

Cash flows related to interest, leases, and capital expenditures included in accounts payable are as follows:


	Nine Months Ended September 30,
(in thousands)	2024		2023
Supplemental disclosures:
Cash paid for interest	$	17,181	$	17,123
Cash paid for income taxes, net of refunds	84		281
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	3,523		2,804


Noncash investing and financing activities:
Change in capital expenditures included in accounts payable	477		4,353

(13) Related Party Transactions

Activity associated with the Partnership’s related party arrangements for the three and nine months ended September 30, 2024 and 2023 is summarized below:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Sales to related parties: (1)
CVR Energy subsidiary	$	566	$	—	$	687	$	4
CVRP JV	768		561		2,026		2,909
Expenses from related parties: (2)
CVR Energy subsidiary	3,573		3,812		10,969		16,798
CVR Services	6,773		6,687		19,925		21,672


	September 30, 2024		December 31, 2023
Accounts payable to affiliates (3)	$	4,680	$	5,319

(1)Sales to related parties, included in Net sales in our condensed consolidated financial statements, consist of (a) sales of feedstocks and services under the Master Service Agreement with CRNF (the “Coffeyville MSA”) and (b) CO sales to CVRP JV and its subsidiaries.

(2)Expenses from related parties, included in Cost of materials and other, Direct operating expenses (exclusive of depreciation and amortization), and Selling, general and administrative expenses in our condensed consolidated financial statements, consist primarily of pet coke and hydrogen purchased under the Coffeyville MSA and management and other professional services from CVR Services under the Corporate MSA.

(3)Consists primarily of amounts payable to CVR Energy subsidiaries under the Coffeyville MSA and Corporate MSA.

Distributions to CVR Partners’ Unitholders

Distributions, if any, including the payment, amount, and timing thereof, and the Board’s distribution policy, including the definition of Available Cash for Distribution, are subject to change at the discretion of the Board. The following tables present

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

quarterly distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, during 2024 and 2023 (amounts presented in table below may not add to totals presented due to rounding):


				Quarterly Distributions Paid (in thousands)
Related Period	Date Paid	Quarterly Distributions Per Common Unit		Public Unitholders		CVR Energy		Total
2023 - 4th Quarter	March 11, 2024	$	1.68	$	11,218	$	6,539	$	17,757
2024 - 1st Quarter	May 20, 2024	1.92		12,821		7,472		20,293
2024 - 2nd Quarter	August 19, 2024	1.90		12,688		7,395		20,082
Total 2024 quarterly distributions		$	5.50	$	36,727	$	21,406	$	58,132


				Quarterly Distributions Paid (in thousands)
Related Period	Date Paid	Quarterly Distributions Per Common Unit		Public Unitholders		CVR Energy		Total
2022 - 4th Quarter	March 13, 2023	$	10.50	$	70,115	$	40,866	$	110,981
2023 - 1st Quarter	May 22, 2023	10.43		69,647		40,594		110,241
2023 - 2nd Quarter	August 21, 2023	4.14		27,646		16,113		43,759
2023 - 3rd Quarter	November 20, 2023	1.55		10,350		6,033		16,383
Total 2023 quarterly distributions		$	26.62	$	177,759	$	103,605	$	281,364

For the third quarter of 2024, the Partnership, upon approval by the Board on October 28, 2024, declared a distribution of $1.19 per common unit, or $12.6 million, which is payable November 18, 2024 to unitholders of record as of November 8, 2024. Of this amount, CVR Energy will receive approximately $4.6 million, with the remaining amount payable to public unitholders.