What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-02-23 compared with 2021-02-23 · 217 added, 186 removed, 222 unchanged (64% of the section changed)

17 unchanged sentences

If it’s not safe, then we don’t do it.

December 31, 2021 | 28

• Environment - We care for our environment.

11 unchanged sentences

Our core Values are driven by our people, inform the way we do business each and every day and enhance our ability to accomplish our mission and related strategic objectives.

December 31, 2020 | 29

Strategic Objectives

5 unchanged sentences

Financial Discipline - We strive to be efficient as possible by maintaining low operating costs and disciplined deployment of capital.

We successfully executed a number of achievements in support of our strategic objectives shown below through the date of this filing despite the challenges experienced by the industry during 2020 as a result of the COVID-19 pandemic:

Safety Reliability Market Capture Financial Discipline

Operated all facilities and corporate offices safely and reliably and maintained financial discipline amid COVID-19 pandemic.

Maintained high asset reliability and a combined utilization rate of 98% at both facilities through the fourth quarter of 2020.

Achieved record shipments of ammonia from the East Dubuque Facility during April 2020.

Reduced lost profit opportunities by approximately $13.7 million compared to 2019.

Generated first carbon offset credits related to N 2 O abatement and continued sequestration of CO 2 for enhanced crude oil recovery at the Coffeyville Facility.

Reduced operating and SG&A expenses by over 12% in 2020 as compared to 2019.

Reduced capital spending by $9 million compared to initial spending plans.

Amended and extended the ABL Credit Agreement during the third quarter of 2020.

Completed Messer contract renewal with favorable conditions including new backup oxygen tank.

Repurchased $7.1 million of CVR Partners common units during 2020.

Operated both facilities safely and reliably and at high utilization rates ü ü ü

Achieved reductions in environmental events and process safety management tier 1 incidents of 67% and 73%, respectively, compared to 2020 ü

Achieved record truck shipments from the Coffeyville Facility in March 2021 ü ü ü

Achieved record ammonia production at the Coffeyville Facility in September 2021 and at the East Dubuque Facility in November 2021 ü ü

December 31, 2021 | 29

Safety Reliability Market Capture Financial Discipline

Utilized downtime throughout the year to proactively complete maintenance work at the Coffeyville Facility, enabling the deferral of the planned turnaround from Fall 2021 to Summer 2022 ü ü ü

Increased UAN production capacity at Coffeyville by 100 tons per day through the installation of a CO2 compressor and ammonia pump ü

Reduced CVR Partners’ annual cash interest expense by over 33% through refinancing a substantial portion of the 2023 Notes and subsequently redeeming $30 million of the remaining balance of the 2023 Notes ü

Declared total cash distributions of $9.89 per common unit related to 2021

Environmental, Social & Governance (“ESG”) Highlights

In the past year, we achieved numerous milestones through our commitment to sustainability, including environmental and safety stewardship, diversity and inclusion, community outreach and sound corporate governance.

We have also established our ESG priorities, which will serve as a guide to the development of our ESG strategy and our first ESG report, which we target for publication in 2022 based on the Sustainability Accounting Standards Board standards.

The following highlights some key achievements of 2021:

Environmental & Safety Stewardship ü Mitigated >1mm metric tons of carbon dioxide equivalents (CO 2 e)/year

ü Manufactured hydrogen and ammonia that qualifies as “blue” with carbon capture and sequestration through enhanced oil recovery

ü Reduced process safety Tier 1 incident rate by 73%

Communities ü Diversity is key component of our Mission & Values

ü Site-Level Community Impact Committees steer local contributions, sponsorships and volunteer activities

ü Paid time off pursuant to Volunteerism Policy

ü Launched Company-wide Diversity & Inclusion training

ü Implemented Remote Work Policy supporting employee engagement and retention

Accountability ü Board-level ESG oversight

ü Average tenure of directors is less than 8 years

ü Standing EH&S Committee with a majority of independent members

ü Annual Code of Ethics & Business Conduct Acknowledgement

ü More than 75% of CEO compensation is variable and tied to the Partnership’s performance

We make modern life possible through the products we manufacture while contributing to the economic well-being of our employees and the communities where we operate.

Industry Factors and Market Conditions

Within the nitrogen fertilizer business, earnings and cash flows from operations are primarily affected by the relationship between nitrogen fertilizer product prices, utilization, and operating costs and expenses, including pet coke and natural gas feedstock costs.

December 31, 2021 | 30

The price at which nitrogen fertilizer products are ultimately sold depends on numerous factors, including the global supply and demand for nitrogen fertilizer products which, in turn, depends on, among other factors, world grain demand and production levels, changes in world population, the cost and availability of fertilizer transportation infrastructure, weather conditions, the availability of imports, and the extent of government intervention in agriculture markets.

production levels, changes in world population, the cost and availability of fertilizer transportation infrastructure, weather conditions, the availability of imports, and the extent of government intervention in agriculture markets.

Nitrogen fertilizer prices are also affected by local factors, including local market conditions and the operating levels of competing facilities.

3 unchanged sentences

General Business Environment

In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency.

The COVID-19 pandemic and actions taken by governments and others in response thereto has and continues to negatively impact the worldwide economy, financial markets, and the agricultural industry.

The COVID-19 pandemic has resulted in significant business and operational disruptions, including business closures in the restaurant and food supply industries, among others, liquidity strains, demand destruction, as well as supply chain challenges, travel restrictions, stay-at-home orders, and limitations on the availability of the workforce, including farmers in the agricultural industry.

As a result, the global demand for liquid transportation fuels, including ethanol (the production of which is a significant driver of demand for fertilizer), has declined, causing many refineries and plants to reduce production or idle, evidenced by a decline in the fourth quarter 2020 average ethanol production of 10% compared to the fourth quarter of 2019 .

Given recent market conditions, the processing of sweet crude oil, including at the crude oil refinery owned and operated by Coffeyville Resources Refining & Marketing, LLC (“CRRM”), an indirect, wholly-owned subsidiary of CVR Energy, has increased compared to 2019 resulting in lower sour crude oil being processed and pet coke being produced.

As a result, increased costs may continue to be incurred by the Partnership in future periods to source feedstocks, such as pet coke.

Concerns over the negative effects of the COVID-19 pandemic on economic and business prospects across the world have contributed to increased market and grain price volatility, and uncertainty in food supply demands, and have diminished expectations for the global economy.

These factors may precipitate a prolonged economic slowdown and recession, which may lead to some decline in demand for the Partnership’s products in the first quarter of 2021 and beyond.

The Partnership believes the general business environment in which it operates will continue to remain volatile during 2021, driven by uncertainty around the availability and prices of its feedstocks and the demand for its products.

As a result, the Partnership anticipates its future operating results and current and long-term financial condition may be negatively impacted.

Due to the rapidly evolving situation, the uncertainty of its duration, and the timing of recovery, the Partnership is not able at this time to predict the extent to which these events may have a material, or any, effect on its financial or operational results in future periods.

Goodwill and Long-Lived Assets

As of December 31, 2019, the Partnership had a goodwill balance of $41.0 million associated with our Coffeyville Facility reporting unit for which the estimated fair value had been in excess of carrying value based on our 2018 and 2019 assessments.

As a result of lower expectations for market conditions in the fertilizer industry, the market performance of the Partnership’s common units, a qualitative analysis, and additional risks associated with the business, the Partnership concluded a triggering event had occurred that required an interim quantitative impairment assessment of goodwill for this reporting unit during the second quarter of 2020.

The results of the impairment test indicated that the carrying amount of the Coffeyville Facility reporting unit exceeded the estimated fair value of the reporting unit, and a full impairment of the asset was required.

Significant assumptions inherent in the valuation methodologies for goodwill include, but are not limited to, prospective financial information, growth rates, discount rates, inflationary factors, and cost of capital.

To evaluate the sensitivity of the fair value calculations for the reporting unit, the Partnership applied a hypothetical 1% favorable change in the weighted average cost of capital, and separately, increased the revenue projections by 10%, holding gross margins steady.

The results of these sensitivity analyses confirmed the need to record a non-cash impairment charge of $41.0 million during 2020.

There is no goodwill remaining as of December 31, 2020.

With the adverse economic impacts discussed above and the uncertainty surrounding the COVID-19 pandemic, there is a heightened risk that amounts recognized, including other long-lived assets, may not be recoverable.

While our assessment in 2020 did not identify the existence of an impairment indicator for our long-lived asset groups, we continue to monitor the

December 31, 2020 | 31

current environment, including the duration and breadth of the impacts that the pandemic will have on demand for our fertilizer products, to assess whether qualitative factors indicate a quantitative assessment is required.

If a quantitative test is performed, the extent to which the recoverability of our long-lived assets could be impaired is unknown.

Such impairment could have a significant adverse impact on our results of operations;

however, an impairment would have no impact on our financial condition or liquidity.

Market Conditions

While there is risk of shorter-term volatility given the inherent nature of the commodity cycle and the impacts of the global COVID-19 pandemic, the Partnership believes the long-term fundamentals for the U.S.

Throughout 2020, the COVID-19 pandemic and actions taken by governments and others in response thereto negatively impacted the worldwide economy, financial markets, and the agricultural industry, resulting in significant business and operational disruptions.

Consequently, the U.S.

demand for liquid transportation fuels, including ethanol (the production of which is a significant driver of demand for corn), declined, causing many refineries and plants to reduce production or idle.

During 2021, government restrictions eased, vaccines became available, and demand for transportation fuels increased.

Demand for ethanol for fuels blending has largely recovered to pre-COVID-19 levels, although an increase in outbreaks of any variant of COVID-19 could reverse this recovery .

Concerns over the long-term negative effects of the COVID-19 pandemic on economic and business prospects across the world have contributed to increased market and grain price volatility and have diminished expectations for the global economy.

The Partnership believes the general business environment in which it operates will continue to remain volatile into 2022, driven by uncertainty around the availability and prices of its feedstocks, demand for its products, and global supply disruptions.

As a result, future operating results and current and long-term financial conditions could be negatively impacted if economic conditions decline, remain volatile, and do not return to pre-pandemic levels.

Due to the uncertainty of the global recovery, including its duration, timing, and strength, the Partnership is not able at this time to predict the extent to which these events may have a material, or any, effect on its financial or operational results in future periods.

Market Indicators

While there is risk of shorter-term volatility given the inherent nature of the commodity cycle, the Partnership believes the long-term fundamentals for the U.S.

nitrogen fertilizer industry remain intact.

The Partnership views the anticipated combination of (i) increasing global population, (ii) decreasing arable land per capita, (iii) continued evolution to more protein-based diets in developing countries, (iv) sustained use of corn as feedstock for the domestic production of ethanol, and (v) positioning at the lower end of the global cost curve should provide a solid foundation for nitrogen fertilizer producers in the U.S.

The Partnership views the anticipated combination of (i) increasing global population, (ii) decreasing arable land per capita, (iii) continued evolution to more protein-based diets in developing countries, (iv) sustained use of corn and soybeans as feedstock for the domestic production of ethanol and other renewable fuels, and (v) positioning at the lower end of the global cost curve should provide a solid foundation for nitrogen fertilizer producers in the U.S.

over the longer term.

While weather conditions in 2020 exhibited normal patterns, weather significantly impacted the timing of the planting season for corn and soybeans in 2019.

Due to excessive wet conditions, crops were planted later than normal in the spring which led to a late harvest of these crops in the fall of 2019.

As a result, the ammonia application season in the fall of 2019 was shortened.

This created a surplus of ammonia inventory in the market during the winter of 2019 leading into 2020.

UAN continues to be impacted by the imposition of import duties on UAN product by the European Union (the “EU”).

This has resulted in shifts in UAN trade flows for product that had previously been shipped to the EU.

In 2020, natural gas prices across the world declined significantly as compared to 2019;

however, since the summer of 2020, forward market prices indicate significantly higher prices for 2021 versus historically low prices in 2020.

Natural gas is the primary feedstock for production of nitrogen fertilizers.

As a result of these factors, in the fourth quarter of 2020, the Partnership has started to see an uptrend in pricing related to these products, with the expectation that product prices will continue to see an uptrend into the first quarter of 2021.

Corn and soybean are two major crops planted by farmers in North America.

Corn crops result in the depletion of the amount of nitrogen and ammonia within the soil in which it is grown, which in turn, results in the need for these nutrients to be replenished after each growing cycle.

Unlike corn, soybeans are able to obtain their own nitrogen through a process known as “N fixation.” As such, upon harvesting of soybeans, the soil retains a certain amount of nitrogen which results in lower demand for nitrogen fertilizer for the following corn planting cycle.

Corn and soybeans are two major crops planted by farmers in North America.

Corn crops result in the depletion of the amount of nitrogen within the soil in which it is grown, which in turn, results in the need for this nutrient to be replenished after each growing cycle.

Unlike corn, soybeans are able to obtain most of their own nitrogen through a process known as “N fixation.” As such, upon harvesting of soybeans, the soil retains a certain amount of nitrogen which results in lower demand for nitrogen fertilizer for the following corn planting cycle.

Due to these factors, nitrogen fertilizer consumers generally operate a balanced corn-soybean rotational planting cycle as evident through the chart presented below for 2021, 2020, and 2019.

The relationship between the total acres planted for both corn and soybean has a direct impact on the overall demand for nitrogen products.

As the number of corn acres increases, the market and demand for nitrogen also increases.

Correspondingly, as the number of soybean acres increases, the market and demand for nitrogen decreases.

Additionally, an estimated 8 billion pounds of soybean oil is expected to go towards producing cleaner biodiesel in 2020 and 2021.

Multiple refiners have announced biodiesel expansion projects for 2021 and beyond, which will only increase the demand and capacity for soybeans.

Due to the uncertainty of how these factors will truly affect the soybean market, it is not yet known how the nitrogen business will be impacted.

The relationship between the total acres planted for both corn and soybean has a direct impact on the overall demand for nitrogen products, as the market and demand for nitrogen increases with increased corn acres and decreases with increased soybean acres.

Additionally, an estimated 11 billion pounds of soybean oil is expected to be used in producing cleaner biodiesel in marketing year 2021/2022.

Multiple refiners have announced renewable diesel expansion projects for 2022 and beyond, which will only increase the demand for soybeans and potentially for corn and canola.

Due to the uncertainty of how these factors will truly affect the grain markets, it is not yet known how the nitrogen business will be impacted.

The 2021 United States Department of Agriculture (“USDA”) reports on corn and soybean acres planted indicated farmers planted 93.4 million acres of corn, representing an increase of 3.0% in corn acres planted as compared to 90.7 million corn acres in 2020.

Planted soybean acres are estimated to be 87.2 million acres, representing a 4.6% increase in soybean acres planted as compared to 83.4 million soybean acres in 2020.

The combined corn and soybean planted acres of 180.6 million is

December 31, 2021 | 31

the highest in history.

Based on current grain inventories and crop prices, farm economics are expected to continue to be very attractive in 2022.

Ethanol is blended with gasoline to meet renewable fuel standard requirements and for its octane value.

1 unchanged sentence

corn crop, so demand for corn generally rises and falls with ethanol demand.

There has been a decline in ethanol demand in 2020 due to decreased demand for transportation fuels as a result of the COVID-19 pandemic.

There was a decline in ethanol demand that began in 2020 and continued through 2021 due to decreased demand for transportation fuels as a result of the COVID-19 pandemic.

However, the lower ethanol demand did not alter the spring 2021 planting decisions by farmers as evidenced in the charts below.

December 31, 2020 | 32

(1) Information used within this chart was obtained from the U.S.

Energy Information Administration (“EIA”).

(2) Information used within this chart was obtained from the United States Department of Agriculture (“USDA”), National Agricultural Statistics Services.

The 2020 USDA reports on corn and soybean acres planted indicated farmers planted approximately 91.0 million acres of corn, representing an increase of 1.4% in corn acres planted as compared to 89.7 million corn acres in 2019.

Planted soybean acres are estimated to be 83.1 million acres, representing a 9.2% increase in soybean acres planted as compared to 76.1 million soybean acres in 2019.

Since the summer of 2020, adverse weather conditions in parts of the Midwest caused the USDA to lower estimated crop yields, particularly for corn.

Further, higher demand for soybeans and corn and lower grain inventories have led to a rally in crop prices for 2020 and 2021 and significantly improved farmer economics.

As a result, we experienced strong demand for ammonia for fall application and fertilizer crop inputs for the spring of 2021.

Prices for natural gas, the primary input for nitrogen fertilizer production, rose in the fourth quarter of 2020 in the U.S.

and rose even more significantly in international markets.

The increase in natural gas prices in the U.S.

has been more than offset by higher product pricing, and the competitiveness of U.S.

nitrogen producers has improved considerably.

(2) Information used within this chart was obtained from the USDA, National Agricultural Statistics Services.

Weather continues to be a critical variable for crop production.

Grain prices rose significantly from the summer of 2020 into the spring of 2021, leading to higher planted acreage for corn and soybeans.

Even with higher planted acres and trendline yields per acre, inventory levels for corn and soybeans remain below historical levels and prices have remained elevated.

The higher grain prices and historically low crop inventories are leading to strong farm economics in advance of spring 2022.

These conditions are expected to drive strong demand for nitrogen fertilizer, as well as other crop inputs.

Fertilizer prices have risen significantly since January 1, 2021 due to strong grain prices, the strong spring 2021 planting season, and lower fertilizer supply due to nitrogen fertilizer production outages during Winter Storm Uri and Hurricane Ida and significant escalation in global feedstock costs for nitrogen fertilizer production.

While natural gas prices were at historical lows across the world in 2020, they have escalated significantly since the summer of 2021, causing nitrogen fertilizer production to be reduced or shut-in in Europe.

In addition to escalating coal and LNG prices in China, nitrogen fertilizer exports have been reduced significantly in the second half of 2021 and are expected to continue to be reduced through the first half of 2022.

On June 30, 2021, CF Industries Nitrogen, L.L.C., Terra Nitrogen, Limited Partnership, and Terra International (Oklahoma) LLC filed petitions with the U.S.

Department of Commerce (“USDOC”) and the U.S.

International Trade Commission (the “ITC”) requesting the initiation of antidumping and countervailing duty investigations on imports of UAN from Russia and Trinidad and Tobago (“Trinidad”).

In August 2021, USDOC decided to pursue an investigation to determine the extent of dumping and unfair subsidies associated with imports from Russia and Trinidad, and the ITC initiated a concurrent investigation to determine whether such imports materially injure the U.S.

On November 30, 2021, USDOC determined that UAN imports from Russia are unfairly subsidized at rates ranging from 9.66% to 9.84% and UAN imports from Trinidad are unfairly subsidized at a rate of 1.83%.

On January 27, 2022, USDOC found that Russian UAN imports are sold at less than fair value into the U.S.

market at rates ranging from 9.15% to 127.19% and that Trinidadian UAN imports at a rate of 63.08%.

As a result of these determinations, USDOC will impose cash deposit requirements on imports of UAN from Russia and Trinidad based on the preliminary rates of antidumping duties.

We believe that if the antidumping and countervailing duty preliminary determinations are confirmed by USDOC, there will likely be lower amounts of imported UAN from Russia and Trinidad.

December 31, 2021 | 32

The tables below show relevant market indicators by month through December 31, 2021:

(1) Information used within these charts was obtained from various third-party sources including Green Markets (a Bloomberg Company), Pace Petroleum Coke Quarterly, and the EIA, amongst others.

December 31, 2020 | 33

Results of Operations

The following should be read in conjunction with the information outlined within the previous sections of this Part II, Item 7, the financial statements, and related notes thereto in Part II, Item 8 of this Report.

The charts presented below summarize our ammonia utilization rates on a consolidated basis and at each of our Facilities.

The following should be read in conjunction with the information outlined within the previous sections of this Part II, Item 7, and the financial statements and related notes thereto in Part II, Item 8 of this Report.

The chart presented below summarizes our ammonia utilization rates on a consolidated basis for the years ended December 31, 2021, 2020, and 2019.

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 adjusted for planned maintenance and turnarounds.

The presentation of our utilization is on a two-year rolling average which takes into account the impact of our planned and unplanned outages on any specific period.

We believe the two-year rolling average is a more useful presentation of the long-term utilization performance of our Facilities.

Utilization is calculated as actual tons of ammonia produced divided by capacity adjusted for planned maintenance and turnarounds.

Utilization is presented solely on ammonia production rather than each nitrogen product as it provides a comparative baseline against industry peers and eliminates the disparity of facility configurations for upgrade of ammonia into other nitrogen products.

With efforts primarily focused on ammonia upgrade capabilities, we believe this measure provides a meaningful view of how well we operate.

On a consolidated basis, utilization increased 2% to 95% for the two years ended December 31, 2020 compared to the two years ended December 31, 2019.

This increase was primarily a result of ammonia storage capacity constraints at the East Dubuque Facility in the first quarter of 2019 due to inclement weather impacting customers’ ability to apply ammonia and the turnaround at the East Dubuque Facility in the fourth quarter of 2019.

Sales and Pricing per Ton - Two of our key operating metrics are total sales for ammonia and UAN along with the product pricing per ton realized at the gate.

Total sales for ammonia and UAN were favorable due to strong demand during the spring application coupled with heavy fill orders from the summer through year end caused by higher crop prices increasing farmer demand.

Additionally, higher total utilization for 2020 increased the total products available for sale for ammonia and UAN.

This increase in production is coupled with an increased draw of ammonia and UAN inventory for 2020.

Product pricing at gate represents net sales less freight revenue divided by product sales volume in tons and is shown in order to provide a pricing measure comparable across the fertilizer industry.

December 31, 2021 | 33

On a consolidated basis, utilization decreased 6% to 92% for the year ended December 31, 2021 compared to the year ended December 31, 2020.

This decrease was primarily due to downtime associated with the Messer air separation plant at the Coffeyville Facility in January, June, August, October, and November of 2021 (the “Messer Outages”), downtime at the East Dubuque Facility due to Winter Storm Uri in February 2021, downtime at the Coffeyville Facility and East Dubuque Facility in July and September 2021, respectively, due to externally driven power outages (the “Power Outages”), and downtime at the East Dubuque Facility in October 2021 for an R2 repair (the “R2 Outage”).

Sales and Pricing per Ton - Two of our key operating metrics are total sales volumes for ammonia and UAN, along with the product pricing per ton realized at the gate.

Total product sales volumes were unfavorable, driven by lower production due to the Messer Outages, Winter Storm Uri, Power Outages, and the R2 Outage.

For the year ended December 31, 2021, the lower sales volumes were more than offset by improved prices of 92% for ammonia and 74% for UAN.

Ammonia and UAN sales prices were favorable primarily due to higher crop pricing coupled with lower fertilizer supply driven by production outages from Winter Storm Uri in February 2021 and Hurricane Ida in August and September 2021, as well as increased industry turnaround activity and lower global fertilizer production due to higher natural gas prices in Europe and Asia.

Product pricing at the gate represents net sales less freight revenue divided by product sales volume in tons and is shown in order to provide a pricing measure comparable across the fertilizer industry.

Production Volumes - Gross tons produced for ammonia represent the total ammonia produced, including ammonia produced that was upgraded into other fertilizer products.

Net tons available for sale represent the ammonia available for sale that was not upgraded into other fertilizer products.

Production for the year ended December 31, 2021 was impacted by the Messer Outages, Winter Storm Uri, the Power Outages, and the R2 Outage.

The table below presents these metrics for the years ended December 31, 2021, 2020, and 2019:

7 unchanged sentences

The table below presents these feedstocks for both facilities for the years ended December 31, 2021, 2020, and 2019.

December 31, 2021 | 34

Year Ended December 31,

2 unchanged sentences

Pet coke (dollars per ton)

$ 44.69 $ 35.25 $ 37.47

Natural gas used in production (thousands of MMBtu) (1)

8,049 8,611 6,856

Natural gas used in production (dollars per MMBtu) (1)

$ 3.95 $ 2.31 $ 2.88

Natural gas in cost of materials and other (thousands of MMBtu) (1)

7,848 9,349 6,961

Natural gas in cost of materials and other (dollars per MMBtu) (1)

$ 3.83 $ 2.35 $ 3.08

(1) The feedstock natural gas shown above does not include natural gas used for fuel.

1 unchanged sentence

Financial Highlights

Overview - For the year ended December 31, 2020, the Partnership’s operating loss and net loss were $34.9 million and $98.2 million, respectively, a $62.3 million decrease in operating income and a $63.2 million increase in net loss, respectively, compared to the year ended December 31, 2019 driven primarily by lower net sales and the recognition of a non-cash impairment charge of $41.0 million driven primarily by the lower pricing environment observed in 2020.

These impacts were offset by higher sales volumes and reductions to operating expense.

Overview - For the year ended December 31, 2021, the Partnership’s operating income and net income were $134.5 million and $78.2 million, respectively, a $169.4 million increase from an operating loss and a $176.4 million increase from a net loss, respectively, compared to the year ended December 31, 2020.

Beyond the goodwill impairment of $41.0 million negatively impacting the 2020 period, these income improvements were driven primarily by higher ammonia and UAN sales prices in 2021, partially offset by higher feedstock costs and operating expenses.

(1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measure shown above.

December 31, 2021 | 35

(1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measures shown above.

Net Sales - Net sales decreased by $54.2 million to $350.0 million for the year ended December 31, 2020 compared to the year ended December 31, 2019.

This decrease was primarily due to unfavorable pricing conditions which contributed $99.0 million in lower revenues offset with increased sales volumes contributing $45.8 million as compared to the year ended December 31, 2019.

Net Sales - Net sales increased by $182.6 million to $532.6 million for the year ended December 31, 2021 compared to the year ended December 31, 2020.

This increase was primarily due to favorable sales pricing contributing $205.1 million in higher revenue, offset by decreased sales volumes resulting in $35.4 million of lower revenue as compared to the year ended December 31, 2020.

For the years ended December 31, 2021 and 2020, net sales included $31.4 million and $33.3 million in freight revenue, respectively, and $10.3 million and $10.1 million in other revenue, respectively.

3 unchanged sentences

Ammonia 69,943 (17,920)

The decrease in UAN and ammonia sales pricing for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily attributable to competitive pricing pressures seen throughout the domestic and international markets.

For UAN, a softening natural gas market, which is the typical feedstock for nitrogen plants, shifting trade flows in UAN due to the imposition of import duties on UAN in the EU contributed to lower prices.

Additionally, lower corn prices due to decreased demand for corn for ethanol blending further contributed to lower UAN prices.

For ammonia, lower natural gas and corn prices and reduced demand for industrial uses of ammonia contributed to lower prices.

The increase in UAN and ammonia sales volumes for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily attributable to strong demand during the 2020 spring application period coupled with heavy fill orders beginning in the summer

December 31, 2020 | 36

of 2020 through year end.

Additionally, higher crop prices in the second half of 2020 led to greater farmer demand, which was also aided by favorable weather conditions for application.

For the year ended December 31, 2021 compared to the year ended December 31, 2020, ammonia and UAN sales prices were favorable primarily due to higher crop pricing coupled with lower fertilizer supply driven by production outages from Winter Storm Uri in February 2021 and Hurricane Ida in August and September 2021, as well as increased industry turnaround activity and lower global fertilizer production due to higher natural gas prices in Europe and Asia during 2021.

Total product sales volumes were unfavorable driven by lower production due to the Messer Outages, Winter Storm Uri, the Power Outages, and the R2 Outage.

(1) Exclusive of depreciation and amortization expense.

Cost of Materials and Other - Cost of materials and other for the year ended December 31, 2021 was $98.3 million, compared to $91.1 million for the year ended December 31, 2020.

The $3.0 million decrease was comprised primarily of a $1.6 million decrease in pet coke costs at our Coffeyville Facility due to lower purchases of pet coke from the Coffeyville Refinery, a decrease in freight expenses and distribution costs of $1.4 million due to higher 2019 freight charges on sales agreements, a decrease in other feedstocks purchases of $1.2 million due to lower purchases of hydrogen and nitrogen, and a decrease related to a draw in our ammonia and UAN inventories contributing $0.6 million driven by higher crop prices leading to greater farmer demand coupled with favorable weather for application through year end, offset by an increase in purchases of third-party ammonia at the Coffeyville Facility contributing $1.8 million.

The $7.2 million increase was comprised primarily of a $12.0 million increase in natural gas costs at our East Dubuque Facility due to higher natural gas prices, $4.5 million increase in pet coke costs at our Coffeyville Facility related to higher third-party coke pricing caused by higher crude oil prices and higher related party pet coke pricing due to the UAN-indexed pricing formula, and $1.5 million increase in purchases of hydrogen.

These increases were offset by a decrease in freight expenses and distribution costs of $4.0 million due to downtime in October and November 2021 and a discontinuation of the Gavilon Railcar Lease in April 2021, a decrease related to a build in our ammonia and UAN inventories contributing $3.5 million, and a decrease in ammonia purchases of $3.3 million.

Direct Operating Expenses (exclusive of depreciation and amortization) - For the year ended December 31, 2021, direct operating expenses (exclusive of depreciation and amortization) were $198.7 million as compared to $157.9 million for the year ended December 31, 2020.

The $15.7 million decrease was primarily due to decreased turnaround costs of $9.1 million relating to the 2019 turnaround for our East Dubuque Facility and a decrease in $1.3 million of repairs and maintenance cost for brick replacement at our Coffeyville Facility with no similar activity in 2020.

Utility costs decreased by $3.0 million due to the lower cost of natural gas resulting from favorable market conditions and lower electricity costs at our Coffeyville Facility due to rate reductions achieved in 2020.

Other reductions to operating expense in 2020 reflect the impact of cost reduction efforts put in place to address the general business environment.

Depreciation and Amortization Expense - Depreciation and amortization expense decreased $3.7 million for the year ended December 31, 2020 compared to the year ended December 31, 2019, as a result of accelerated depreciation of certain assets that

The $40.8 million increase was primarily due to higher personnel costs for labor of $4.6 million and share-based compensation expenses of $15.6 million as a result of higher market prices for CVR Partners’ units, higher electrical provider pricing and usage of $13.7 million, higher natural gas prices of $9.9 million, higher insurance costs of $2.4 million, and increased turnaround expenses of $2.2 million.

These costs were partially offset by a decrease related to a build in ammonia and UAN inventories of $7.8 million.

December 31, 2021 | 36

were removed following the 2019 turnaround at the East Dubuque Facility, coupled with additions to property, plant, and equipment during the current year.

Selling, General, and Administrative Expenses, and Other - Selling, general and administrative expenses and other decreased approximately $10.4 million for the year ended December 31, 2020 compared to the year ended December 31, 2019.

The decrease was primarily related to a reduced amount of asset write offs in 2020 compared to 2019 contributing $2.8 million, coupled with decreased personnel costs and management fees of $7.2 million driven by lower allocated expense from CVR Energy, including stock-based compensation expense as a result of lower market prices for CVR Energy share and Partnership units during 2020.

Depreciation and Amortization Expense - Depreciation and amortization expense decreased $2.6 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily as a result of inventory changes offset by increases in accelerated depreciation related to projects to be completed by 2025 that will retire assets earlier than their original expected useful life.

Selling, General, and Administrative Expenses, and Other - Selling, general and administrative expenses and other increased approximately $8.8 million for the year ended December 31, 2021 compared to the year ended December 31, 2020.

The increase was primarily related to higher personnel costs in 2021 due to an increase in share-based compensation expenses resulting from the increase in CVR Partners’ unit price.

Other Income, Net - Other income, net for the year ended December 31, 2021 was $4.7 million, compared to $0.2 million for the year ended December 31, 2020.

The increase was due to sales of natural gas volumes at the East Dubuque Facility in February 2021.

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 GAAP financial information presented in accordance with U.S.

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 U.S.

These non-GAAP financial measures are important factors in assessing our operating results and profitability and include the performance and liquidity measures defined below.

Effective January 1, 2020, the Partnership no longer presents the non-GAAP performance measure of Adjusted EBITDA, as management no longer relies on this financial measure when evaluating the Partnership’s performance and does not believe it enhances the users understanding of its financial statements in a useful manner.

Beginning with the second quarter of 2021, management began reporting Adjusted EBITDA, as defined below.

We believe the presentation of this non-GAAP measure is meaningful to compare our operating results between periods and peer companies.

All prior periods presented have been conformed to the definition below.

The following are non-GAAP measures we present for the year ended December 31, 2021:

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

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 of directors (the “Board”) of our general partner 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.

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 and Adjusted 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 of directors of our general partner (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.

December 31, 2021 | 37

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.

9 unchanged sentences

Major Scheduled Turnaround Activities

Overall, our results are negatively impacted by lost production during downtime that results in lost sales and certain reduced variable expenses included in Cost of materials and other and Direct operating expenses (exclusive of depreciation and amortization).

The year ended December 31, 2020 had no planned turnarounds.

The effects of the planned, full facility

December 31, 2020 | 38

turnarounds completed during the years ended December 31, 2019 and 2018, exclusive of the impacts due to lost production during the turnaround downtime, are shown below:

Facility Related Period Turnaround Downtime Turnaround Expense

(in thousands)

Estimated Lost Production

(in tons of Ammonia)

East Dubuque 2019 - 3rd/4th Quarter 32 days 9,842 33,706

Coffeyville 2018 - 2nd Quarter 15 days 6,399 21,450

Coffeyville Facility - The next planned turnaround at the Coffeyville Facility is expected to commence in the summer of 2022.

Additionally, the Coffeyville Facility had planned downtime which was completed during the fourth quarter of 2021 at a cost of $2.0 million.

For the year ended December 31, 2021, we also incurred turnaround expense of $0.3 million, related to planning for the Coffeyville Facility’s expected turnaround in the summer of 2022.

East Dubuque Facility - The next planned turnaround at the East Dubuque Facility is expected to occur in the summer of 2022.

For the year ended December 31, 2021, we incurred turnaround expense of $0.6 million, related to planning for the East Dubuque Facility’s expected turnaround in the summer of 2022.

Goodwill Impairment

No such charge was recognized during 2019.

Insurance Recovery

During the fourth quarter of 2018, the Partnership recognized a $6.1 million business interruption insurance recovery associated with an outage at the Coffeyville Facility during 2017.

The recovery is recorded in Other income, net.

No such income was recognized in 2020 or 2019.

As a result of lower expectations for market conditions in the fertilizer industry during 2020, the market performance of the Partnership’s common units, a qualitative analysis, and additional risks associated with the business, the Partnership performed an interim quantitative impairment assessment of goodwill for the Coffeyville Facility reporting unit as of June 30, 2020.

The results of the impairment test indicated the carrying amount of this reporting unit exceeded the estimated fair value, and a full, non-cash impairment charge of $41.0 million was required.

Non-GAAP Reconciliations

Reconciliation of Net Loss to EBITDA

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

Year Ended December 31,

(in thousands) 2021 2020 2019

Net loss $ (98,181) $ (34,969) $ (50,027)

Net income (loss) $ 78,155 $ (98,181) $ (34,969)

Interest expense, net 60,978 63,428 62,636

2 unchanged sentences

EBITDA 212,670 41,354 107,488

Reconciliation of Net Cash Provided By Operating Activities to EBITDA

Goodwill impairment — 40,969 —

Adjusted EBITDA $ 212,670 $ 82,323 $ 107,488

December 31, 2021 | 38

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

Year Ended December 31,

2 unchanged sentences

Non-cash items:

Loss on extinguishment of debt (8,462) — —

Goodwill impairment — (40,969) —

4 unchanged sentences

EBITDA 212,670 41,354 107,488

December 31, 2020 | 39

Goodwill impairment — 40,969 —

Adjusted EBITDA $ 212,670 $ 82,323 $ 107,488

Reconciliation of EBITDA to Available Cash for Distribution

4 unchanged sentences

Goodwill impairment — 40,969 —

Current reserves for amounts related to:

Current (reserves) adjustments for amounts related to:

Net cash interest expense (excluding capitalized interest) (50,562) (59,995) (59,997)

Debt service (30,000) — —

Financing fees (4,627) — —

Maintenance capital expenditures (16,226) (11,649) (18,247)

Utility pass-through 4,013 — —

Common units repurchased (529) (7,076) —

Other (reserves for) / releases of amounts reserved for:

Future turnarounds (4,500) — —

Repayment of current portion of long-term debt (2,240) — —

Recapture of prior negative available cash (5,917) — —

Future operating needs (5,308) (28,000) —

Major scheduled expenditures 2,567 — —

Other (reserves) releases:

Reserve for recapture of prior negative available cash (14,980) (5,917) —

Future turnaround (10,750) (4,500) —

Previously established cash reserves — — 25,433

Reserve for repayment of current portion of long-term debt — (2,240) —

Cash reserves for future operating needs 5,308 (5,308) (28,000)

Major scheduled expenditures 2,240 2,567 —

Available cash for distribution (1) (2)

$ 96,557 $ (11,795) $ 26,677

Common units outstanding 10,681 10,706 11,328

1 unchanged sentence

However, available cash for distribution is calculated quarterly, with distributions (if any) being paid in the period following declaration.

(2) The Partnership paid no cash distributions for the fourth quarter of 2019 or the first three quarters of 2020.

No distributions were declared for the fourth quarter of 2020.

(2) The Partnership did not declare a cash distributions for the first quarter of 2021, declared and paid a $1.72 and $2.93 cash distribution related to the second and third quarter of 2021, respectively, and declared a cash distribution of $5.24 per common unit related to the fourth quarter of 2021.

December 31, 2021 | 39

Liquidity and Capital Resources

1 unchanged sentence

Our principal uses of cash are for working capital, capital expenditures, funding our debt service obligations, and paying distributions to our unitholders, as further discussed below.

The effects of the COVID-19 pandemic have resulted in a significant and swift reduction in U.S.

economic activity.

These effects have caused significant volatility and disruption of the financial markets, and we have observed adverse impacts to our business and financial performance, of which the nature and extent of such impacts remains uncertain.

This period of extreme economic disruption, including business closures in the restaurant and food supply industries, idling of ethanol facilities, and limitations on the availability of the workforce, including farmers in the agricultural industry, may continue to have an impact on our business, results of operations, and access to sources of liquidity.

In view of the uncertainty of the depth and extent of the contraction in the U.S.

economy and potential impact on the demand for our fertilizer products, we took proactive actions in 2020 to address the impacts we may experience in our results of operations, liquidity, and financial condition, including the following:

• The deferment of the Coffeyville Facility turnaround from the fall of 2020 to the summer of 2021, enabled by certain maintenance we proactively performed during the first quarter of 2020, and the East Dubuque Facility turnaround from 2021 to 2022;

• A reduction in the amount of maintenance capital expenditures in 2020 to only include those projects which are a priority to support continuing safe and reliable operations, or which we consider are critical to support future activities;

• The amendment of the ABL Credit Agreement extending its term to September 30, 2022, optimizing the borrowing capacity and fee structure, and revising certain provisions to provide an improved credit facility for the Partnership.

December 31, 2020 | 40

When paired with the actions outlined above and prudently managing our operating costs and capital expenditures in 2021, we believe that our cash from operations and existing cash and cash equivalents, along with borrowings, as necessary, under the ABL Credit Agreement, formerly the AB Credit Facility, will be sufficient to satisfy anticipated cash requirements associated with our existing operations for at least the next 12 months.

However, our future capital expenditures and other cash requirements could be higher than we currently expect as a result of various factors.

The effects of the COVID-19 pandemic resulted in a reduction in U.S.

economic activity in 2020 and 2021.

These effects caused significant volatility and disruption of the financial markets, and we have observed adverse impacts to our business and financial performance, of which the nature and extent of such impacts remains uncertain.

In early 2021, as the impacts of the COVID-19 pandemic started to recover, Winter Storm Uri and Hurricane Ida caused unprecedented disruptions to natural gas and electricity supply throughout the Midwest and Gulf Coast regions, leading to lower fertilizer supply due to production outages which increased the price of fertilizer.

This period of extreme economic disruption may continue to have an impact on our business, results of operations, and access to sources of liquidity.

While we believe demand for our fertilizer products is stable, there is still uncertainty on the horizon as COVID-19 vaccines are distributed and countries and states continue to monitor their efforts against the virus, and variants thereof, and weigh further lock-down measures.

In executing financial discipline, we have successfully implemented and are maintaining the following measures:

• Taking advantage of downtime to perform maintenance activities which enabled us to defer the East Dubuque Facility turnaround from 2021 to 2022;

• Reducing the amount of maintenance capital expenditures to only include those projects which are a priority to support continuing safe and reliable operations, or which we consider are critical to support future activities.

When paired with the actions outlined above, we believe that our cash from operations and existing cash and cash equivalents, along with borrowings, as necessary, will be sufficient to satisfy anticipated cash requirements associated with our existing operations for at least the next 12 months.

However, our future capital expenditures and other cash requirements could be higher than we currently expect as a result of various factors including, but not limited to, rising material and labor costs and other inflationary pressures.

Additionally, our ability to generate sufficient cash from our operating activities and secure additional financing depends on our future performance, which is subject to general economic, political, financial, competitive, and other factors, some of which may be beyond our control.

1 unchanged sentence

There can be no assurance that we will seek to do any of the foregoing or that we will be able to do any of the foregoing on terms acceptable to us or at all.

On June 23, 2021, the Partnership and certain of its subsidiaries completed a private offering of $550.0 million aggregate principal amount of 6.125% Senior Unsecured Notes due June 2028 (the “2028 Notes”), which mature on June 15, 2028, and partially redeemed the Partnership’s 9.25% Senior Notes due June 2023 (the “2023 Notes”) in the amount of $550.0 million.

On September 23, 2021 and December 22, 2021, the Partnership redeemed an additional $15.0 million and $15.0 million, respectively, in aggregate principal of the 2023 Notes.

On February 22, 2022, the Partnership redeemed the remaining $65 million in aggregate principal amount of the 2023 Notes.

Collectively, these transactions represent a significant and favorable change in the Partnership’s cash flow and liquidity position, with an annual savings of approximately $26.0 million in future interest expense, as compared to our 2020 Form 10-K.

Additionally, on September 30, 2021, the Partnership entered into a new credit agreement with an aggregate principal amount of up to $35.0 million with a maturity date of September 30, 2024 (the “ABL Credit Facility”) and terminated its $35.0 million ABL Credit Agreement, dated as of September 30, 2016, as amended (the “2016 ABL Credit Agreement”).

The Partnership and its subsidiaries were in compliance with all applicable covenants under their respective debt instruments as of December 31, 2021.

Refer to Part II, Item 8, Note 5 (“Long-Term Debt”) of this Report for further information.

We do not have any “off-balance sheet arrangements” as such term is defined within the rules and regulations of the SEC.

December 31, 2021 | 40

Cash and Other Liquidity

3 unchanged sentences

(in thousands) 2021 2020

9.25% Senior Secured Notes, due June 2023 (1)

$ 65,000 $ 645,000

6.125% Senior Notes, due June 2028

6.50% Senior Notes, due April 2021, net of current portion (1) — 2,240

Unamortized discount and debt issuance costs (4,358) (11,058)

2 unchanged sentences

Total long-term debt, including current portion $ 610,642 $ 636,182

(1) The 6.50% Notes, due April 2021, mature within 12 months, and, therefore, the outstanding balance of $2.2 million has been classified as short-term debt as of December 31, 2020.

The Partnership and its subsidiaries were in compliance with all applicable covenants under their respective debt instruments as of December 31, 2020.

Refer to Note 5 (“Long-Term Debt”) in Part II, Item 8 for further information.

(1) The call price of the 9.25% Senior Secured Notes due June 2023 (the “2023 Notes”) decreased to par on June 15, 2021.

On June 23, 2021, September 23, 2021, and December 22, 2021, the Partnership redeemed $550 million, $15 million, and $15 million, respectively, of the 2023 Notes, at par, plus accrued and unpaid interest.

The remaining balance of $65 million was outstanding as of December 31, 2021.

The $65 million outstanding balance of the 2023 Notes was paid in full on February 22, 2022 at par, plus accrued and unpaid interest.

(2) The $2.2 million outstanding balance of the 6.5% Notes, due April 2021 (the “2021 Notes”) was paid in full on April 15, 2021.

On June 23, 2021, the Partnership and its subsidiary, CVR Nitrogen Finance Corporation (“Finance Co.” and, together with CVR Partners, the “Issuers”), completed a private offering of $550 million aggregate principal amount of 6.125% Senior Secured Notes due 2028 (the “2028 Notes”).

The net proceeds from the 2028 Notes, plus cash on hand, were used to redeem $550 million aggregate principal amount of the 2023 Notes.

On September 23, 2021 and December 22, 2021, the Partnership redeemed $15 million and $15 million aggregate principal amount of the outstanding 2023 Notes, respectively.

On September 30, 2021, the Partnership entered into the ABL Credit Agreement and terminated its 2016 ABL Credit Agreement.

As of December 31, 2021, the Partnership had the remaining portion of the 2023 Notes, the 2028 Notes, and the ABL Credit Agreement, the proceeds of which may be used to fund working capital, capital expenditures, and for other general corporate purposes.

On February 22, 2022, the Partnership redeemed the remaining $65 million in aggregate principal amount of the 2023 Notes.

Refer to Part II, Item 8, Note 5 (“Long-Term Debt”) of this Report for further information.

Capital Spending

10 unchanged sentences

Total capital expenditures $ 25,686 $ 16,431 $36,000 - 39,000

December 31, 2020 | 41

In light of the changing environment and proactive maintenance performed during several outages at the third-party owned and operated air separation unit at our Coffeyville Facility during the first quarter of 2020, we moved our turnaround from the previously planned timeframe of the fall of 2020 to the fall of 2021, with an estimated cost of $7 to $9 million.

We will continue to monitor market conditions and make adjustments, if needed, to our current capital spending or turnaround plans.

Our estimated capital expenditures are subject to change due to unanticipated changes in the cost, scope, and completion time for capital projects.

1 unchanged sentence

We may also accelerate or defer some capital expenditures from time to time.

Capital spending for CVR Partners is determined

December 31, 2021 | 41

by the Board.

We will continue to monitor market conditions and make adjustments, if necessary, to our current capital spending or turnaround plans.

The next planned turnaround is at the Coffeyville Facility and is expected to occur in the summer of 2022, with an estimated cost of $10 to $13 million.

The turnaround at our East Dubuque Facility is expected to commence in the summer of 2022, with an estimated cost of $13 to $15 million.

Additionally, the Coffeyville Facility had planned downtime for certain maintenance activities, which was completed in the fourth quarter of 2021 at a cost of $2.0 million.

For the year ended December 31, 2021, we also incurred approximately $0.3 million and $0.6 million, in turnaround expense related to planning for the Coffeyville Facility’s and East Dubuque Facility’s expected turnarounds in 2022, respectively.

Distributions to Unitholders

3 unchanged sentences

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.

The Partnership did not pay distributions for the year ended December 31, 2020 or December 31, 2018.

During the year ended December 31, 2019, the Partnership paid distributions totaling $4.00 per common unit on a split-adjusted basis, or $45.3 million.

Distributions, if any, including the payment, amount, and timing thereof, are subject to change at the discretion of the Board.

The following table presents distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, as of December 31, 2021.

Distributions Paid (in thousands)

Related Period Date Paid Distribution Per

Common Unit Public Unitholders CVR Energy Total

2021 - 2nd Quarter August 23, 2021 $ 1.72 $ 11,678 $ 6,694 $ 18,372

2021 - 3rd Quarter November 22, 2021 2.93 19,893 11,404 31,297

Total distributions $ 4.65 $ 31,571 $ 18,098 $ 49,669

There were no distributions declared or paid by the Partnership related to the first quarter of 2021 and fourth quarter of 2020, and no distributions were declared or paid during 2020.

During the year ended December 31, 2019, CVR Partners paid distributions totaling $4.00 per common unit on a split-adjusted basis, or $45.3 million.

Of these distributions, CVR Energy received $15.6 million.

For the fourth quarter of 2021, the Partnership, upon approval by the Board on February 21, 2022, declared a distribution of $5.24 per common unit, or $56.0 million, which is payable March 14, 2022 to unitholders of record as of March 7, 2022.

Of this amount, CVR Energy will receive approximately $20.4 million, with the remaining amount payable to public unitholders.

Capital Structure

1 unchanged sentence

The Unit Repurchase Program enables the Partnership to repurchase up to $10 million of the Partnership’s common units.

Repurchases under the Unit Repurchase Program may be made from time-to-time through open market transactions, block trades, privately negotiated transactions, or otherwise in accordance with applicable securities laws.

The timing, price, and amount of repurchases (if any) will be made at the discretion of management of our general partner and are subject to market conditions, as well as corporate, regulatory, and other considerations.

On November 2, 2020, the Partnership announced that the Board had approved a 1-for-10 reverse split of the Partnership’s common units that was completed on November 23, 2020, pursuant to which each ten common units of the Partnership were converted into one common unit of the Partnership (the “Reverse Unit Split”).

In accordance with the Partnership’s Agreement of Limited Partnership, as amended (the “Partnership Agreement”), following the Reverse Unit Split, any fractional units of record holders were rounded up or down, as applicable, to the nearest whole common unit, with any fraction equal to or above 0.5 common units rounding up to the next higher common unit.

Following the Reverse Unit Split, the number of common units outstanding decreased from approximately 111 million common units to approximately 11 million common units, with proportionate adjustments to the common units under the Partnership’s long-term incentive plan and outstanding awards thereunder.

See Note 1 (“Organization and Nature of Business”) in Part II, Item 8 for a discussion regarding the delisting of the NYSE.

During the year ended December 31, 2020, on a split-adjusted basis, the Partnership repurchased 623,177 common units on the open market in accordance with a unit repurchase agreement under Rules 10b5-1 and 10b-18 of the Exchange Act at a cost of $7.1 million, inclusive of transaction costs, or an average price of $11.35 per common unit.

At December 31, 2020, the Partnership had $2.9 million in authority remaining under the Unit Repurchase Program.

On February 22, 2021, the Board authorized an additional $10 million for the Unit Repurchase Program.

This Unit Repurchase Program does not obligate the Partnership to acquire any common units and may be cancelled, terminated, extended or increased by the Board at any time.

During the year ended December 31, 2021, the Partnership repurchased 24,378 common units on the open market in accordance with a repurchase agreement under Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended, at a cost of $0.5 million, inclusive of transaction costs, or an average price of $21.70 per common unit.

During the year ended December 31, 2020, as adjusted to reflect the impact of the 1-for-10 reverse unit split of the Partnership’s common units that was effective as of November 23, 2020, the Partnership repurchased 623,177 common units, respectively, at a cost of $7.1 million, inclusive of transaction costs, or an average price of $11.35 per common unit.

As of December 31, 2021, the Partnership had $12.4 million in authority remaining under the Unit Repurchase Program.

This Unit Repurchase Program does not obligate the Partnership to acquire any common units and may be cancelled or terminated by the Board at any time.

December 31, 2021 | 42

6 unchanged sentences

Financing activities (86,426) (7,625) (45,410)

Net (decrease) increase in cash and cash equivalents $ (6,435) $ (24,782) $ 12,603

Net increase (decrease) in cash and cash equivalents and restricted cash $ 81,957 $ (6,435) $ (24,782)

Operating Activities

The change in net cash flows from operating activities for the year ended December 31, 2020 as compared to the year ended December 31, 2019 is primarily due to unfavorable changes in operating results, excluding non-cash items, of $29.9 million, partially offset by favorable changes in working capital of $10.7 million, and unfavorable changes in non-current assets and liabilities of $0.2 million.

The change in net cash flows from operating activities for the year ended December 31, 2021 as compared to the year ended December 31, 2020 is primarily due to a $171.3 million increase in EBITDA, a $22.0 million net increase in non-cash share based compensation as a result of higher market prices for CVR Partners’ units, favorable changes in working capital of $6.7 million, and a $8.5 million loss on extinguishment of debt primarily associated with the partial redemption of the 2023 Notes in June 2021.

This activity is partially offset by a non-cash impairment of goodwill of $41.0 million recognized in 2020.

Investing Activities

The change in net cash used in investing activities for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily attributed to the increase in capital expenditures of $0.2 million, related to growth spending on the Coffeyville Facility’s urea capacity upgrade project in the current period and maintenance spending on the East Dubuque Facility’s reactor conversion revamp in the prior period, partially offset by a decrease in cash outflows of $0.3 million from the purchase of land during the year ended December 31, 2019 with no corresponding amounts paid in 2020, and a decrease in cash inflows of $0.1 million from proceeds on the sale of assets.

The change in net cash used in investing activities for the year ended December 31, 2021 compared to the year ended December 31, 2020 was due to increased capital expenditures during 2021 of $2.0 million due to deferring certain capital projects from 2020 to 2021.

Financing Activities

The change in net cash used in financing activities for the year ended December 31, 2020 compared to the year ended December 31, 2019 was the result of cash distributions paid to unitholders of $45.3 million during 2019 compared to cash used for repurchase of common units of $7.1 million and payment of deferred financing costs of $0.4 million related to the ABL Credit Agreement amendment entered into during 2020.

The change in net cash used in financing activities for the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily due to the partial redemptions of the 2023 Notes of $580.0 million, cash distributions paid of $49.7 million, the payment of $3.9 million in deferred financing costs during the second and third quarters of 2021 related to the offering of the 2028 Notes and the ABL Credit Facility, and the redemption of the remaining 2021 Notes of $2.2 million.

These decreases were partially offset by the Partnership’s June 2021 offering of $550.0 million of the 2028 Notes, coupled with a reduction of $6.5 million in repurchases of the Partnership’s common units in 2021 compared to 2020.

Recent Accounting Pronouncements

Refer to Note 2 (“Summary of Significant Accounting Policies”) in Part II, Item 8 for a discussion of recent accounting pronouncements applicable to the Partnership.

Refer to Part II, Item 8, Note 2 (“Summary of Significant Accounting Policies”) of this Report for a discussion of recent accounting pronouncements applicable to the Partnership.

Critical Accounting Estimates

7 unchanged sentences

We compare the estimated realizable value of inventories to their cost by product at each of our facilities.

Depending on inventory levels, the per-ton realizable value of our fertilizer products is estimated using pricing on in-transit orders, pricing for open, fixed-price orders that have not shipped, and, if

Depending on inventory levels, the per-ton realizable value of our fertilizer

December 31, 2021 | 43

volumes remain unaccounted for, current management pricing estimates for fertilizer products.

products is estimated using pricing on in-transit orders, pricing for open, fixed-price orders that have not shipped, and, if volumes remain unaccounted for, current management pricing estimates for fertilizer products.

Management’s estimate for current pricing reflects up-to-date pricing in each facility’s market as of the end of each reporting period.

Reductions to selling prices for unreimbursed freight costs are included to arrive at net realizable value, as applicable.

During the year ended December 31, 2020, we recognized a loss on inventory to reflect net realizable value of $0.7 million.

For the years ended December 31, 2019 and 2018, there was no adjustment.

During the year ended December 31, 2021 and December 31, 2019, there was no adjustment.

For the year ended December 31, 2020, we recognized a loss on inventory to reflect net realizable value of $0.7 million.

Due to the amount and variability in volume of fertilizer product inventories maintained, changes in production costs, and the volatility of market pricing for fertilizer products, losses recognized to reflect fertilizer product inventories at the lower of cost or net realizable value could have a material impact on the Partnership’s results of operations.

11 unchanged sentences

As a result, we recorded a non-cash impairment charge of $41.0 million during 2020.

There is no goodwill remaining as of December 31, 2020.

We performed our annual impairment reviews of goodwill for 2019 and 2018, on November 1 of each such year and concluded no impairments.

There was no goodwill remaining as of December 31, 2020.

We performed our annual impairment reviews of goodwill for 2019, on November 1 and concluded no impairments.

For the period ended December 31, 2019, we performed a qualitative assessment and concluded there were no events or circumstances which would trigger the performance of a quantitative analysis after reviewing all factors impacting the Coffeyville Facility reporting unit, including improved market conditions and financial results in 2019 as compared to the financial forecasts from those used in the fair value analysis at December 31, 2018, where the estimated fair value of the Coffeyville Facility reporting unit exceeded its carrying value by approximately 36% based upon the results of our quantitative goodwill impairment test.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis