What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-23 · 249 added, 225 removed, 565 unchanged (46% of the section changed)

Financial Statements and Supplementary Data

CVR Partners, LP and Subsidiaries

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019

Consolidated Statements of Partners ’ Capital for the Years Ended December 31, 2021, 2020 and 2019

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019

Notes to the Consolidated Financial Statements

December 31, 2021 | 46

Report of Independent Registered Public Accounting Firm

17 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment

As described in Note 2 to the consolidated financial statements, annually or as facts or circumstances may dictate, management performs a valuation of the Coffeyville Facility reporting unit to determine if a goodwill impairment exists.

During the second quarter of 2020 following the completion of the spring planting season and observation of certain market and other conditions described in Note 2, the Partnership concluded a triggering event occurred and performed an interim quantitative impairment assessment.

The identification of a triggering event and the determination of the fair value of the reporting unit required management to make significant estimates and develop assumptions related to cash flow forecasts using estimates of future nitrogen fertilizer product pricing, volumes to be sold, costs to be incurred for key process inputs and other operating expenses

December 31, 2020 | 46

as well as estimating appropriate discount rates and growth rates for future periods.

Changes in these assumptions could have had a significant impact on the identification of a triggering event as well as the reporting unit’s estimated fair value.

As a result of the quantitative impairment assessment, a full goodwill impairment of $41.0 million was recorded during the year ended December 31, 2020.

We identified the goodwill impairment assessment of the Coffeyville Facility reporting unit as a critical audit matter.

The principal consideration for our determination that the goodwill impairment assessment is a critical audit matter was the degree of complexity and subjectivity inherent in determining management’s estimates.

Our audit procedures related to the Coffeyville Facility reporting unit’s goodwill impairment assessment included the following, among others:

• We tested the design and operating effectiveness of management’s processes and controls over the identification of a triggering event and the fair value assessment of the Coffeyville reporting unit.

• We evaluated the reasonableness of a triggering event by considering the current market conditions following the completion of the spring planting season as well as the economic uncertainty surrounding the COVID-19 pandemic.

• We evaluated the reasonableness of future nitrogen fertilizer pricing assumptions by comparing the prices used by management to current industry and economic trends considering the impacts of the COVID-19 pandemic as well as comparing those prices to the historical performance of the Coffeyville reporting unit, performed sensitivity analyses to evaluate the change in the fair value estimates that would result from changes in those price assumptions, and recalculated management’s estimates.

• We compared forecasted sales volumes and expenses to historical operating results.

• We utilized valuation professionals with specialized skills and knowledge to assist in evaluating the Coffeyville Facility’s discounted cash flow model and guideline public company methods and certain significant assumptions, including the discount rate, terminal growth rate, and cost of capital.

• We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and ( 2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

We have served as the Partnership’s auditor since 2013.

Houston, Texas

Dallas, Texas

February 22, 2022

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/s/ GRANT THORNTON LLP

Houston, Texas

Dallas, Texas

February 22, 2022

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Property, plant, and equipment, net 850,462 897,847

Goodwill — 40,969

Other long-term assets

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Goodwill impairment — 40,969 —

Operating (loss) income ( 34,882 ) 27,380 6,314

Operating income (loss) 134,479 ( 34,882 ) 27,380

Other (expense) income:

2 unchanged sentences

Other income, net 4,711 159 269

159 269 6,201

Loss before income taxes ( 98,151 ) ( 34,987 ) ( 50,073 )

Income (loss) before income tax expense 78,212 ( 98,151 ) ( 34,987 )

Income tax expense (benefit) 57 30 ( 18 )

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

Net loss per common unit - basic and diluted

$ ( 8.77 ) $ ( 3.09 ) $ ( 4.42 )

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

Basic and diluted earnings (loss) per common unit $ 7.31 $ ( 8.77 ) $ ( 3.09 )

Distributions declared per common unit

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Balance at December 31, 2018 11,328,297 $ 499,825 $ 1 $ 499,826

— ( 50,027 ) — ( 50,027 )

Balance at December 31, 2018 11,328,297 499,825 1 499,826

Cash distributions to common unitholders – Affiliates

2 unchanged sentences

— ( 29,745 ) — ( 29,745 )

— ( 34,969 ) — ( 34,969 )

Net loss — ( 34,969 ) — ( 34,969 )

Balance at December 31, 2019 11,328,297 419,543 1 419,544

— ( 98,181 ) — ( 98,181 )

Net loss — ( 98,181 ) — ( 98,181 )

Repurchase of common units

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Balance at December 31, 2020 10,705,710 314,240 1 314,241

Cash distributions to common unitholders – Affiliates

— ( 18,098 ) — ( 18,098 )

Cash distributions to common unitholders – Non-affiliates

— ( 31,571 ) — ( 31,571 )

Net income — 78,155 — 78,155

Repurchase of common units

( 24,378 ) ( 529 ) — ( 529 )

Balance at December 31, 2021 10,681,332 $ 342,197 $ 1 $ 342,198

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

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Cash flows from operating activities:

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

Adjustments to reconcile net loss to net cash provided by operating activities:

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

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 73,480 76,077 79,839

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Loss on asset disposals 948 582 3,397

Loss on debt extinguishment 8,462 — —

Share-based compensation 23,069 1,035 3,445

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Cash flows from financing activities:

Principal payments on senior secured notes

( 582,240 ) — —

Proceeds on issuance of senior secured notes

Payment of deferred financing costs

( 3,892 ) ( 448 ) —

Repurchase of common units ( 529 ) ( 7,076 ) —

2 unchanged sentences

Cash distribution to common unitholders – Non-affiliates ( 31,571 ) — ( 29,745 )

Payment of deferred financing costs ( 448 ) — —

Other financing activities ( 96 ) ( 101 ) ( 97 )

Net cash used in 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 )

Cash and cash equivalents, beginning of period 30,559 36,994 61,776

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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.

The Partnership’s products are sold on a wholesale basis in the United States.

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.

NYSE Listing Requirements and Reverse Unit Split

The Partnership’s common units are listed on the New York Stock Exchange (the “NYSE”) under the symbol “UAN.” On April 20, 2020, the average closing price of the Partnership’s common units over a 30 consecutive trading-day period fell below $1.00 per common unit, resulting in noncompliance with the continued listing standards in Section 802.01C of the NYSE Listed Company Manual.

The Partnership received written notification of this noncompliance from the NYSE on April 22, 2020, and had until January 1, 2021 to regain compliance or be subject to the NYSE’s suspension and delisting procedures.

On November 2, 2020, the Partnership announced that the board of directors of its general partner (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.

The Partnership’s common units began trading on a split-adjusted basis when markets opened on November 24, 2020, under the symbol “UAN” and a new CUSIP number.

As of November 30, 2020, the Reverse Unit Split enabled the Partnership to regain compliance with NYSE listing requirements ahead of the January 1, 2021 deadline.

All references to common units and per unit amounts in the consolidated financial statements and notes related thereto have been retrospectively adjusted to reflect the effect of the Reverse Unit Split for all periods presented.

Interest Holders

As of December 31, 2020, public common unit holders held approximately 64 % of the Partnership’s outstanding limited partner interests;

CVR Services, LLC (“CVR Services”) (formerly Coffeyville Resources, LLC), a wholly-owned subsidiary of CVR Energy, held approximately 36 % of the Partnership’s outstanding limited partner interests;

As of December 31, 2021, public common unitholders held approximately 64 % of the Partnership’s outstanding limited partner interests;

CVR Services, LLC (“CVR Services”), a wholly-owned subsidiary of CVR Energy, held approximately 36 % of the Partnership’s outstanding limited partner interests;

and CVR GP, LLC (“CVR GP” or the “general partner”), a wholly owned subsidiary of CVR Energy, held 100 % of the Partnership’s general partner interest.

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Unit Repurchase Program

On May 6, 2020, the Board, on behalf of the Partnership, authorized a unit repurchase program (the “Unit Repurchase Program”).

On May 6, 2020, the board of directors of the Partnership’s general partner (the “Board”), on behalf of the Partnership, authorized a unit repurchase program (the “Unit Repurchase Program”).

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.

During the year ended December 31, 2020, adjusted to reflect the impact of the Reverse Unit Split, the Partnership repurchased 623,177 common units on the open market

December 31, 2020 | 53

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

in accordance with a 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.

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.

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Where applicable, the notes to these consolidated financial statements have been updated to discuss all significant subsequent events which have occurred.

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CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(2) Summary of Significant Accounting Policies

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Reclassifications

Certain reclassifications have been made within the consolidated financial statements for the years ended December 31, 2019 and 2018 to conform with current presentation.

Catalyst inventory with a value of $ 5.6 million as of December 31, 2019 was reclassified in the first quarter of 2020 to Other long-term assets to conform to current presentation.

Certain reclassifications have been made within the consolidated financial statements for prior periods to conform with current presentation.

Use of Estimates

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Also included within Accounts Receivable are unbilled fixed price contracts which is discussed further within Note 6 (“Revenue”).

December 31, 2020 | 54

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allowances for doubtful accounts are generally recorded when it becomes probable the receivable will not be collected and is booked to bad debt expense.

The largest concentration of credit for any one customer was approximately 22 % and 20 % of the net accounts receivable balance at December 31, 2021 and 2020, respectively.

Bad debt expense was $ 0.1 million and $ 0.1 million for the years ended December 31, 2020 and 2019, respectively.

A recovery was recognized during the year ended 2018 of $ 1.1 million related to bad debt expense previously written off.

Bad debt expense was $ 0.2 million, $ 0.1 million and $ 0.1 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Inventories consist of fertilizer products which are valued at the lower of FIFO cost, or net realizable value.

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At December 31, 2021 and 2020, inventories included depreciation of approximately $ 3.1 million and $ 2.0 million, respectively.

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CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment, net

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Total property, plant and equipment, net $ 850,462 $ 897,847

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CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Leasehold improvements and assets held under finance leases are depreciated or amortized on the straight-line method over the shorter of the contractual lease term or the estimated useful life of the asset.

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ROU assets represent the Partnership’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease.

ROU assets and liabilities are recognized at the commencement date based on the present value of minimum lease payments over the lease term.

ROU assets and liabilities are recognized at the commencement date based on the present value of minimum lease payments over the lease term using an incremental borrowing rate with a maturity similar to the lease term, as our leases do not generally provide an implicit rate.

The lease term is modified to reflect options to extend or terminate the lease when it is reasonably certain we will exercise such option.

The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise, in which case the depreciation policy in the “Property, Plant and Equipment, net” section above is applicable.

The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably

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CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

certain of exercise, in which case the depreciation policy in the “Property, Plant and Equipment, net” section above is applicable.

The periodic lease payments are treated as payments of the lease obligation and interest is recorded as interest expense.

Impairment of Long-Lived Assets and Goodwill

Long-lived assets used in operations are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in future expected cash flows.

If the sum of the undiscounted expected future cash flows of an asset group is less than the carrying value, including applicable liabilities, the carrying value is written down to its estimated fair value.

Individual assets are grouped for impairment purposes based on a judgmental assessment of the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other assets (for example, at a fertilizer facility level).

The Partnership tests goodwill for impairment annually impairment annually on November 1 of each year, or more frequently if events or changes in circumstances indicate the asset might be impaired.

Long-lived assets (excluding goodwill, intangible assets with indefinite lives, and deferred tax assets) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future net cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds their fair value.

Assets to be disposed of are reported at the lower of their carrying value or fair value less cost to sell.

Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired less liabilities assumed.

Intangible assets are assets that lack physical substance (excluding financial assets).

Goodwill acquired in a business combination and intangible assets with indefinite useful lives are not amortized, while intangible assets with finite useful lives are amortized.

Goodwill and intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired.

The Partnership uses November 1 of each year as its annual valuation date for its goodwill impairment test.

One of the Partnership’s reporting units, the Coffeyville Facility, had a goodwill balance of $ 41.0 million at December 31, 2019.

During the second quarter of 2020, following completion of the spring planting season, the market pricing for ammonia and UAN, which are the facility’s two primary products, experienced significant pricing declines driven by updated market expectations around supply and demand fundamentals which were expected to continue into the second half of 2020.

Additionally, significant uncertainty remained as to the nature and extent of impacts to be seen on the overall demand for corn and soybean given reduced ethanol production and broader economic conditions which had negatively impacted demand.

Therefore, in connection with the preparation of the financial statements for the three months ended June 30, 2020, given the pricing declines experienced in the second quarter of 2020, further muting of the Partnership’s near-term economic recovery assumptions, including revised forecasts for product pricing in 2020 and beyond, and market price performance of the Partnership’s common units, the Partnership concluded an impairment indicator was present and a triggering event under ASC Topic 350, Intangibles-Goodwill and Other , had occurred as of June 30, 2020 and an interim quantitative impairment assessment was performed.

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

Therefore, in connection with the preparation of the financial statements for the three months ended June 30, 2020, given the pricing declines experienced in the second quarter of 2020, further muting of the Partnership’s near-term economic recovery assumptions, and market price performance of the Partnership’s common units, the Partnership concluded an impairment indicator was present and a triggering event under ASC Topic 350, Intangibles-Goodwill and Other , had occurred as of June 30, 2020.

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

Based on the interim quantitative analysis, it was determined that the estimated fair value of the Coffeyville Facility reporting unit did not exceed its carrying value.

As a result, the Partnership recorded a full non-cash impairment charge of $ 41.0 million during the three months ended June 30, 2020.

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

December 31, 2020 | 56

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Partnership performed the annual impairment reviews of goodwill for 2019 and 2018 and concluded no impairments.

For the period ended December 31, 2019, the Partnership 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, 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 the Partnership’s quantitative goodwill impairment test.

As a result, the Partnership recorded a full non-cash impairment charge of $ 41.0 million during the year ended December 31, 2020.

As there was no goodwill remaining as of December 31, 2021 and 2020, no annual impairment review was performed.

The Partnership performed the annual impairment review of goodwill for 2019 associated with the Coffeyville Facility reporting unit and concluded there were no impairments.

For the period ended December 31, 2019, no events or circumstances were identified which would trigger the performance of a quantitative analysis after reviewing all qualitative factors impacting the reporting unit including improved market conditions, financial results, and financial forecasts from those used in the fair value analysis for December 31, 2018, which resulted in the fair value of the Coffeyville Facility reporting unit exceeding its carrying value by approximately 36 %.

Loss Contingencies

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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.

Accrued amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts.

As of December 31, 2021 and 2020, there are no matters or contingencies that require recognition or disclosure.

December 31, 2021 | 56

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Environmental, Health & Safety (“EHS”) Matters

The Partnership is subject to various stringent federal, state, and local environmental, health, and safety rules and regulations.

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Environmental expenditures for capital assets are capitalized at the time of the expenditure when such costs provide future economic benefits.

Accrued amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts.

As of December 31, 2021 and 2020, no liabilities have been recognized for environmental remediation matters as no matters have been identified that are considered to be probable or estimable.

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Direct operating expenses also include allocated share-based compensation from CVR Energy and its subsidiaries, as discussed in Note 7 (“Share-Based Compensation”).

Selling, general and

December 31, 2020 | 57

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

administrative expenses consist primarily of legal expenses, treasury, accounting, marketing, human resources, information technology, and maintaining the corporate and administrative offices in Texas and Kansas.

Selling, general and administrative expenses consist primarily of legal expenses, treasury, accounting, marketing, human resources, information technology, and maintaining the corporate and administrative offices in Texas and Kansas.

Share-Based Compensation

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See Note 7 (“Share-Based Compensation”) for further discussion.

December 31, 2021 | 57

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

CVR Partners accounts for income taxes utilizing the asset and liability approach.

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See Note 9 (“Related Party Transactions”) for a detailed discussion of the billing procedures and the basis for calculating the charges for specific products and services.

Recent Accounting Pronouncements - Adoption of Credit Losses Standard

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326).

The ASU replaces the incurred loss model with a current expected credit loss model for more timely recognition of expected impairment losses for most financial assets and certain other instruments that are not measured at fair value through net income.

Effective January 1, 2020, we adopted this ASU with no material impact on the Partnership’s consolidated financial position or results of operations.

Recent Accounting Pronouncements - Adoption of Fair Value Measurement Standard

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820).

The ASU eliminates such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy.

Certain disclosures are required to be applied on a retrospective basis and others on a prospective basis.

Effective January 1, 2020, we adopted this ASU with no material impact on the Partnership’s disclosures.

Recent Accounting Pronouncements - New Accounting Standards Issued But Not Yet Implemented

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740).

Recent Accounting Pronouncements - Adoption of Income Taxes Standard

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2019-12, Income Taxes (Topic 740).

The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and modifies other areas of the topic to clarify the application of GAAP.

Certain amendments within the standard are required to be applied on a retrospective basis and others on a prospective basis.

This standard is effective for the Partnership beginning January 1, 2021, with early adoption permitted.

The Partnership is evaluating the effect of adopting this new accounting guidance on its consolidated financial

December 31, 2020 | 58

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

statements, but does not currently expect adoption will have a material impact on the Partnership’s consolidated financial position or results of operations.

The Partnership does not intend to early adopt this ASU.

Effective January 1, 2021, we adopted this ASU with no material impact on the Partnership’s consolidated financial position or results of operations.

Recent Accounting Pronouncements - Adoption of Codification Improvements Standard

In October 2020, the FASB issued ASU 2020-10, Codification Improvements.

The ASU amends various sections of the codification in the FASB’s ongoing efforts to simplify and improve guidance.

Effective January 1, 2021, we adopted this ASU with no material impact on the Partnership’s consolidated financial position or results of operations.

Recent Accounting Pronouncements - New Accounting Standards Issued But Not Yet Implemented

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).

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ASU 2020-04 provides companies with optional expedients for contract modifications under Topics 310, 470, 842, and 815-15, excluded components of certain hedging relationships, fair value hedges, and cash flow hedges, as well as certain exceptions, which are intended to help ease the potential accounting burden associated with transitioning away from these reference rates.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which clarifies certain optional expedients and exceptions for contract modifications and hedge accounting.

Companies can apply the ASU immediately.

However, the guidance will only be available for a limited time (generally through December 31, 2022).

The Partnership is currently evaluating the impact that adopting this new accounting standard will have on its consolidated financial statements and related disclosures.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements.

The ASU amends various sections of the codification in the Boards ongoing efforts to simplify and improve guidance.

This standard is effective for the Partnership beginning January 1, 2021, with early adoption permitted.

The Partnership is evaluating the effect of adopting this new accounting guidance on its consolidated financial statements, but does not currently expect adoption will have a material impact on the Partnership’s consolidated financial position or results of operations.

The Partnership does not intend to early adopt this ASU.

The Partnership is currently evaluating the impact of adopting this new accounting standard, but does not expect it to have a material impact on its consolidated financial statements and related disclosures.

Lease Overview

We lease railcars and certain facilities to support the Partnership’s operations.

We lease railcars and certain facilities and equipment to support the Partnership’s operations.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more.

1 unchanged sentence

Certain leases also include options to purchase the leased property.

The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase

December 31, 2021 | 58

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

option reasonably certain of exercise.

Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Additionally, we do not have any lessor or sub-leasing arrangements.

Additionally, we do not have any material lessor or sub-leasing arrangements.

Balance Sheet Summary at December 31, 2021 and 2020

The following tables summarize the ROU asset and lease liability balances for the Partnership’s operating and finance leases at December 31, 2021 and 2020:

(in thousands) 2020 2019

Operating Leases:

December 31, 2021 December 31, 2020

(in thousands) Operating Leases Finance Leases Operating Leases Finance Leases

ROU asset, net

4 unchanged sentences

Real estate and other 665 — 867 105

Finance Leases:

ROU asset, net

Real estate and other $ 101 $ 201

Lease liability

Real estate and other $ 105 $ 205

December 31, 2020 | 59

CVR Partners, LP and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Lease Expense Summary for the Year Ended December 31, 2020 and 2019

We recognize lease expense on a straight-line basis over the lease term.

For the year ended December 31, 2020 and 2019, we recognized lease expense comprised of the following components:

Lease Expense Summary for the Years Ended December 31, 2021, 2020, and 2019

We recognize lease expense on a straight-line basis over the lease term and short-term lease expense within Direct operating expenses (exclusive of depreciation and amortization).

For the years ended December 31, 2021, 2020, and 2019, we recognized lease expense comprised of the following components:

Year Ended December 31,

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Interest expense on lease liability 2 6 10

Short-term lease expense, recognized within Direct operating expenses (exclusive of depreciation and amortization), was $ 0.4 million and $ 0.4 million for the year ended December 31, 2020 and 2019, respectively.

Short-term lease expense $ 552 $ 372 $ 417

Lease Terms and Discount Rates

The following outlines the remaining lease terms and discount rates used in the measurement of the Partnership’s ROU assets and liabilities:

Year Ended December 31,

Weighted-average remaining lease term (years)

Operating Leases 2.9 3.4

Finance Leases 1.3 2.3

December 31, 2021 December 31, 2020

Operating Leases Finance Leases Operating Leases Finance Leases

Weighted-average remaining lease term 2.1 years 0.0 years 2.9 years 1.3 years

Weighted-average discount rate 5.1 % — % 5.1 % 4.0 %

Operating Leases 5.1 % 5.1 %

Finance Leases 4.0 % 3.9 %

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Maturities of Lease Liabilities

The following summarizes the remaining minimum lease payments through maturity of the Partnership’s ROU assets and liabilities at December 31, 2020:

(in thousands) Operating Leases Finance Leases

2021 $ 3,672 $ 107

Thereafter — —

The following summarizes the remaining minimum operating lease payments through maturity of the Partnership’s ROU assets and liabilities at December 31, 2021.

There were no finance lease payments remaining at December 31, 2021.

(in thousands) Operating Leases

Year Ending December 31,

Total lease payments 5,516

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On July 31, 2020, the Partnership and Messer LLC (“Messer”) entered into an On-Site Product Supply Agreement (the “Messer Agreement”).

Under the Messer Agreement, among other obligations, Messer is obligated to supply and make certain capital improvements during the term of the Messer Agreement, and the Partnership is obligated to take as available and pay for, oxygen, nitrogen, and compressed dry air from Messer’s facility.

This arrangement for the Partnership’s purchase of oxygen, nitrogen, and dry air from Messer does not meet the definition of a lease under FASB ASC Topic 842, Leases, (“Topic 842”), as the Partnership does not expect to receive substantially all of the output of Messer’s on-site production from its air separation unit over the life of the Messer Agreement.

The Messer Agreement also obligates Messer to install a new oxygen

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

storage vessel and related equipment to be used solely by the Coffeyville Facility.

The arrangement for the use of the oxygen storage vessel and related equipment meets the definition of a lease under Topic 842, as the Partnership will receive all output associated with the vessel.

Based on terms outlined in the Messer Agreement, the Partnership expects the lease of the oxygen storage vessel to be classified as a financing lease with an amount between $ 20 and $ 25 million being capitalized upon lease commencement when the oxygen storage vessel is placed in service.

On February 21, 2022, the Partnership entered into the First Amendment to the On-Site Product Supply Agreement (the “Messer Amendment”, and collectively, the “Amended Messer Agreement”) with Messer.

Under the Amended Messer Agreement, among other obligations, Messer is obligated to supply and make certain capital improvements during the term of the Amended Messer Agreement, and the Partnership is obligated to take as available and pay for, oxygen, nitrogen, and compressed dry air from Messer’s facility.

This arrangement for the Partnership’s purchase of oxygen, nitrogen, and dry air from Messer does not meet the definition of a lease under FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“Topic 842”), as the Partnership does not expect to receive substantially all of the output of Messer’s on-site production from its air separation unit over the life of the Amended Messer Agreement.

The Amended Messer Agreement also obligates Messer to install a new oxygen storage vessel, related equipment and infrastructure (“Oxygen Storage Vessel” or “Vessel”) to be used solely by the Coffeyville Facility.

The arrangement for the use of the Oxygen Storage Vessel meets the definition of a lease under Topic 842, as the Partnership will receive all output associated with the Vessel.

Based on terms outlined in the Amended Messer Agreement, the Partnership expects the lease of the Oxygen Storage Vessel to be classified as a financing lease with an amount of approximately $ 25 million being capitalized upon lease commencement when the Vessel is placed in service.

(4) Other Current Liabilities

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Personnel accruals $ 7,920 $ 7,475

Share-based compensation 5,888 442

Operating lease liabilities 3,052 3,309

Accrued taxes other than income taxes 1,744 1,769

Accrued interest 1,654 2,506

Sales incentives 1,555 2,215

Share-based compensation 442 5,011

Prepaid revenue contracts 954 197

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Total other current liabilities $ 24,401 $ 18,709

Other current liabilities include amounts accrued by the Partnership and owed to CVR Energy and its affiliates of $ 5.4 million at December 31, 2019.

The Partnership had no separate affiliate liabilities owed to CVR Energy and its affiliates at December 31, 2020, as allocation of affiliate accruals is part of the amount charged to the Partnership under the new Corporate Master Service Agreement, which became effective January 1, 2020 (the “Corporate MSA”).

Refer to Note 9 (“Related Party Transactions”) for additional discussion.

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(5) Long-Term Debt

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$ 65,000 $ 645,000

6.50 % Senior Notes, due April 2021, net of current portion (3)

6.125 % Senior Notes, due June 2028 (1)

Unamortized discount and debt issuance costs (3)

( 4,358 ) ( 11,058 )

Total long-term debt

610,642 633,942

Current portion of long-term debt (3) 2,240 —

Current portion of long-term debt and finance lease obligations (4)

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

$ 636,182 $ 632,406

(1) This debt was issued at a $ 16.1 million discount which is being amortized, as interest expense, over the remaining term of the debt.

Debt issuance costs associated with this debt totaled $ 9.4 million.

(2) The estimated fair value of total long-term debt outstanding was approximately $ 645.7 million and $ 673.8 million as of December 31, 2020 and 2019, respectively.

(1) The estimated fair value of the 9.25 % Senior Secured Notes due June 2023 (the “2023 Notes”) was approximately $ 65.1 million and $ 645.7 million as of December 31, 2021 and December 31, 2020, respectively.

The estimated fair value of the 6.125 % Senior Secured Notes due June 2028 was approximately $ 580.3 million as of December 31, 2021.

This estimate of fair value is a Level 2 measurement as it was determined by quotations obtained from a broker-dealer who makes a market in these and similar securities.

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

(2) The call price of 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 on the redeemed portion.

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.

(3) For the years ended December 31, 2021, 2020, and 2019, amortization of the discount on debt and amortization of deferred financing costs reported as Interest expense, net totaled approximately $ 2.5 million, $ 3.8 million, and $ 3.4 million, respectively.

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

Credit Agreements

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$ 35,000 $ — $ — $ 35,000 September 30, 2024

(1) At the option of the borrowers, loans under the ABL Credit Agreement initially bear interest at an annual rate equal to (i) 1.00 % plus a base rate, Thereafter, loans will bear interest (i) at such rates if our quarterly excess availability is greater than 50% and (ii) 1.50 % plus a base rate, otherwise.

(2) The ABL Credit Agreement was amended on September 29, 2020 to, among other things, reduce the commitments thereunder to $ 35 million and extended the maturity date to September 30, 2022.

Deferred financing costs of $ 0.4 million were capitalized related to this amendment and will be amortized from Prepaid expenses and other current assets and Other long-term assets over the remaining term of the ABL Credit Agreement.

Amortization expense was $ 0.2 million for the years ended December 31, 2020, 2019, and 2018.

9.25 % Senior Secured Notes due 2023

On June 10, 2016, CVR Partners and CVR Nitrogen Finance Corporation (“CVR Nitrogen Finance”), an indirect wholly-owned subsidiary of CVR Partners (together the “2023 Notes Issuers”), certain subsidiary guarantors named therein and Wilmington Trust, National Association, as trustee and as collateral trustee, completed a private offering of $ 645 million aggregate principal amount of 9.25 % Senior Secured Notes due 2023 (the “2023 Notes”).

(1) On September 30, 2021, the Partnership entered into a senior secured asset based 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”).

(2) Beginning September 30, 2021, loans under the Partnership’s ABL Credit Facility bear interest at an annual rate equal to, at the option of the borrowers, (i) (a) 1.615 % plus the daily simple Secured Overnight Financing Rate (“SOFR”) or (b) 0.615 % plus a base rate, if our quarterly excess availability is greater than or equal to 75%, (ii) (a) 1.865 % plus SOFR or (b) 0.865 % plus a base rate, if our quarterly excess availability is greater than or equal to 50% but less than 75%, or (iii) (a) 2.115 % plus SOFR or (b) 1.115 % plus a base rate, otherwise.

(3) For the years ended December 31, 2021, 2020, and 2019, amortization expense for deferred financing costs were approximately $ 0.3 million, $ 0.2 million, and $ 0.2 million, respectively.

6.125 % Senior Secured Notes due June 2028

On June 23, 2021, CVR Partners 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 June 2028 (the “2028 Notes”).

Interest on the 2028 Notes is payable semi-annually in arrears on June 15 and December 15 each year, commencing on December 15, 2021.

The 2028 Notes mature on June 15, 2028, unless earlier redeemed or repurchased by the Issuers.

Interest on the 2023 Notes is payable semi-annually in arrears on June 15 and December 15 of each year.

The 2023 Notes are guaranteed on a senior secured basis by all of the Partnership’s existing subsidiaries.

On or after June 15, 2019, the 2023 Notes Issuers may on any one or more occasions, redeem all or part of the 2023 Notes at the redemption prices set forth below expressed as a percentage of the principal amount of the 2023 Notes plus accrued and unpaid interest to the applicable redemption date.

The 2028 Notes are jointly and severally guaranteed on a senior secured basis by all the existing domestic subsidiaries of CVR Partners, excluding Finance Co.

In relation to the issuance of the 2028 Notes, the Partnership received $ 546.7 million of net cash proceeds, net of underwriting fees and other third-party fees and expenses associated with the offering.

The debt issuance costs of the 2028 Notes totaled approximately $ 3.9 million and are being amortized over the term of the 2028 Notes as interest expense using the effective-interest amortization method.

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We may, at our option, at any time and from time to time prior to June 15, 2024, on any one or more occasions, redeem all or part of the 2028 Notes at a price equal to 100 % of the principal amount plus a “make whole” premium, plus accrued and unpaid interest.

On or after June 15, 2024, we may, on any one or more occasions, redeem all or part of the 2028 Notes at the redemption prices set forth below, expressed as a percentage of the principal amount of the respective notes, plus accrued and unpaid interest to the applicable redemption date.

12-month period beginning June 15, Percentage

2024 103.063 %

2025 101.531 %

2026 and thereafter 100.000 %

The indenture governing the 2028 Notes contains covenants that are substantially the same as the indenture governing the 2023 Notes.

However, the 2028 Notes contain a permitted investment activity carveout that allows for the transfer of certain carbon capture assets to a joint venture for the purpose of monetizing potential tax credits.

9.25 % Senior Secured Notes due June 2023

On June 10, 2016, CVR Partners and Finance Co.

(together the “2023 Notes Issuers”), certain subsidiary guarantors named therein and Wilmington Trust, National Association, as trustee and as collateral trustee, completed a private offering of $ 645 million aggregate principal amount of 9.25 % Senior Secured Notes due 2023 (the “2023 Notes”).

The 2023 Notes mature on June 15, 2023, unless earlier redeemed or repurchased by the issuers.

Interest on the 2023 Notes is payable semi-annually in arrears on June 15 and December 15 of each year.

The 2023 Notes are guaranteed on a senior secured basis by all of the Partnership’s existing subsidiaries.

On or after June 15, 2021, the 2023 Notes Issuers may redeem all or part of the 2023 Notes at a price equal to 100 % of the principal amount plus accrued and unpaid interest to the applicable redemption date.

The 2023 Notes contain customary covenants for a financing of this type that, among other things, restrict CVR Partners’ ability and the ability of certain of its subsidiaries to:

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In addition, the indenture contains customary events of default, the occurrence of which would result in or permit the trustee or the holders of at least 25 % of the 2023 Notes to cause the acceleration of the 2023 Notes, in addition to the pursuit of other available remedies.

ABL Credit Agreement

On September 29, 2020, CVR Partners amended the ABL Credit Agreement, a senior secured asset based revolving credit facility (the “ABL Credit Facility”) with a group of lenders and UBS AG (“UBS”), as administrative agent and collateral agent.

The ABL Credit Amendment amended the aggregate principal amount of availability of up to $ 35 million with an incremental facility, which permits an increase in borrowings of up to $ 25 million in the aggregate subject to additional lender commitments and certain other conditions.

The ABL Credit Amendment is scheduled to mature on September 30, 2022.

The Partnership is in compliance with all covenants of the 9.25 % Senior Secured Notes, the 6.50 % Senior Notes, and the ABL Credit Agreement as of December 31, 2020.

On June 23, 2021, the Partnership redeemed $ 550 million aggregate principal amount of the outstanding 2023 Notes at par and settled accrued interest of approximately $ 1.1 million through the date of redemption.

As a result of this transaction, the Partnership recognized in Interest expense, net a $ 7.8 million loss on extinguishment of debt in the second quarter of 2021, which includes the write-off of unamortized deferred financing costs and original issue discount of $ 2.9 million and $ 4.9 million, respectively.

On September 23, 2021 and December 22, 2021, the Partnership redeemed $ 15 million and $ 15 million, respectively, in aggregate principal amount of the outstanding 2023 Notes at par and settled accrued interest of approximately $ 0.4 million and less than $ 0.1 million, respectively, through the date of each redemption.

As a result of these redemptions and for the year ended December 31, 2021, the Partnership recognized in Interest expense, net a $ 0.3 million loss on extinguishment of debt, which includes the write-off of unamortized deferred financing costs and discount of $ 0.1 million and $ 0.2 million, respectively.

On February 22, 2022, the Partnership redeemed all of the outstanding 2023 Notes at par and settled accrued interest of approximately $ 1.1 million through the date of redemption.

As a result of this transaction, the Partnerships will recognize a loss on extinguishment of debt of $ 0.6 million in the first quarter of 2022, which includes the write-off of unamortized deferred financing costs and discount of $ 0.2 million and $ 0.4 million, respectively.

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ABL Credit Agreement

On September 30, 2021, CVR Partners, LP and its subsidiaries, CVR Nitrogen, LP, East Dubuque Nitrogen Fertilizers, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, CVR Nitrogen Holdings, LLC, Finance Co.

and CVR Nitrogen GP, LLC, entered into the ABL Credit Facility with Wells Fargo Bank National Association, a national banking association (“Wells Fargo”), as administrative agent, collateral agent, and lender.

The ABL Credit Facility has an aggregate principal amount of availability of up to $ 35.0 million with an incremental facility, which permits an increase in borrowings of up to $ 15.0 million in the aggregate subject to additional lender commitments and certain other conditions.

The proceeds of the loans may be used for general corporate purposes of the Partnership and its subsidiaries.

The ABL Credit Facility provides for loans and letters of credit, subject to meeting certain borrowing base conditions, with sub-limits of $ 3.5 million for swingline loans and $ 10.0 million for letters of credit.

The ABL Credit Facility is scheduled to mature on September 30, 2024.

Loans under the ABL Credit Facility initially bear interest at an annual rate equal to, at the option of the borrowers, (i) 1.615 % plus SOFR or (ii) 0.615 % plus a base rate.

Based on the previous quarter’s excess availability, such annual rate could increase to, at the option of the borrowers, (i) 2.115 % plus SOFR or (ii) 1.115 % plus a base rate.

The borrowers must also pay a commitment fee on the unutilized commitments and also pay customary letter of credit fees.

The ABL Credit Facility contains customary covenants for a financing of this type and requires the Partnership in certain circumstances to comply with a minimum fixed charge coverage ratio test and contains other restrictive covenants that limit the ability of the Partnership and its subsidiaries ability to, among other things, incur liens, engage in a consolidation, merger, purchase or sale of assets, pay dividends, incur indebtedness, make advances, investments and loans, enter into affiliate transactions, issue certain equity interests, create subsidiaries and unrestricted subsidiaries, and create certain restrictions on the ability to make distributions, loans, and asset transfers among the Partnership or its subsidiaries.

In connection with the ABL Credit Facility, the Partnership incurred lender and other third-party costs of $ 0.8 million which have been deferred in Prepaid expenses and other current assets and Other long-term assets and are being amortized as interest expense over the term of the ABL Credit Facility using the straight-line amortization method.

Covenant Compliance

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

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

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The customer acceptance point is stated in the contract and may be at one of the Partnership’s manufacturing facilities, at one of the Partnership’s off-site loading facilities, or at the customer’s designated facility.

Freight revenue recognized by the Partnership represents the pass-through finished goods delivery costs incurred prior to customer acceptance and is reimbursed by customers.

Freight revenue recognized by the Partnership represents the pass-through finished goods delivery costs incurred prior to customer acceptance

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and is reimbursed by customers.

An offsetting expense for freight is included in Cost of materials and other.

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Deferred revenue is recorded at the point in time in which a prepaid contract is legally enforceable and the associated right to consideration is unconditional prior to transferring product to the customer.

An associated receivable is recorded for uncollected prepaid

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contract amounts.

An associated receivable is recorded for uncollected prepaid contract amounts.

Contracts requiring prepayment are generally short-term in nature and, as discussed above, revenue is recognized at the point in time in which the customer obtains control of the product.

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Balance at December 31, 2021 $ 87,060

(1) Includes $ 33.4 million where payment associated with prepaid contracts was collected.

(1) Includes $ 93.7 million where payment associated with prepaid contracts was collected as of December 31, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Major Customers

CVR Partners has two customers who comprised 26 %, 28 %, and 20 % of net sales for the years ended December 31, 2020, 2019, and 2018, respectively.

CVR Partners had one customer who comprised 13 % of net sales for the year ended December 31, 2021 and two customers who comprised 26 % and 28 % of net sales for the years ended December 31, 2020 and 2019, respectively.

(7) Share-Based Compensation

CVR Partners’ Phantom Unit Awards

CVR Partners has a Long-Term Incentive Plan (“LTIP”) which permits the granting of options, stock and unit appreciation rights (“SARs”), restricted shares, restricted stock units, phantom units, unit awards, substitute awards, other unit-based awards, cash awards, dividend and distribution equivalent rights, share awards, and performance awards (including performance share units, performance units, and performance-based restricted stock).

As of December 31, 2020, only phantom unit awards under the LTIP remained outstanding.

Individuals who are eligible to receive awards and grants under the LTIP include CVR Energy’s and the Partnership’s employees, officers, consultants, advisors, and directors.

A summary of phantom unit award activity and changes under the LTIP during the year ended December 31, 2020 is presented below:

(in thousands, except per unit data) Units Weighted-

CVR Partners has a Long-Term Incentive Plan (“CVR Partners LTIP”) which permits the granting of options, stock and unit appreciation rights (“SARs”), restricted shares, restricted stock units, phantom units, unit awards, substitute awards, other unit-based awards, cash awards, dividend and distribution equivalent rights, share awards, and performance awards (including performance share units, performance units, and performance-based restricted stock).

Individuals who are eligible to receive awards under or in connection with the CVR Partners LTIP include any director, officer, employee, employee candidate, consultant or advisor of the Partnership, its subsidiaries, or its parent.

CVR Partners’ Phantom Unit Awards and Compensation Expense

Phantom unit awards have been granted to officers, employees, and directors (the “Share-Based Awards”).

As a result, Share-Based Awards that reflect the value and distributions of CVR Partners, as applicable, have been granted and remain outstanding as of December 31, 2021.

Each Share-Based Award and the related distribution equivalent right represents the right to receive, upon vesting, a cash payment equal to (i) the average fair market value of one unit, in accordance with the award agreement, plus (ii) the per unit cash value of all distributions declared and paid, as applicable, from the grant date through the vesting date.

The Share-Based Awards are generally graded-vesting awards, which vest over three years with one-third of the award vesting each year the grantee remains employed by the Partnership and its subsidiaries.

Compensation expense is recognized ratably, based on service provided to the Partnership and its subsidiaries, with the amount recognized fluctuating as a result of the Share-Based Awards being re-measured to fair value at the end of each reporting period due to their liability-award classification.

A summary of phantom unit award activity during the year ended December 31, 2021 is presented below:

(in thousands, except per unit data) Units (1)

Non-vested at December 31, 2020 518,881 $ 14.70 $ 8,312

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Non-vested at December 31, 2021 361,840 $ 18.89 $ 29,921

(1) As of December 31, 2021, there are no outstanding awards under the CVR Partners LTIP, and the only outstanding and unvested phantom awards are issued in connection with, not under, the CVR Partners LTIP.

Unrecognized compensation expense associated with the phantom units at December 31, 2021 was approximately $ 19.0 million, which is expected to be recognized over a weighted average period of 2.0 years.

Compensation expense recorded for the years ended December 31, 2020, 2019, and 2018 related to awards under the CVR Partners LTIP was approximately $ 0.6 million, $ 2.3 million, and $ 1.9 million, respectively.

As of December 31, 2020 and 2019, the Partnership had a liability of $ 0.9 million and $ 1.2 million, respectively, for cash settled non-vested phantom unit awards and associated distribution equivalent rights.

For the years ended December 31, 2020, 2019, and 2018, the Partnership paid cash of $ 0.8 million, $ 1.7 million, and $ 1.7 million, respectively, to settle liability-classified awards upon vesting.

Compensation expense recorded for the years ended December 31, 2021, 2020, and 2019 related to these awards was approximately $ 27.0 million, $ 0.6 million, and $ 2.3 million, respectively.

As of December 31, 2021 and 2020, the Partnership had a liability of $ 9.1 million and $ 0.6 million, respectively, for cash settled non-vested phantom unit awards and associated distribution equivalent rights and, for the years ended December 31, 2021, 2020, and 2019, paid cash of $ 11.1 million, $ 0.5 million, and $ 0.8 million, respectively, to settle liability-classified awards upon vesting.

As of December 31, 2021 and 2020, CVR Energy had a liability associated with the CVR Partners LTIP of $ 3.3 million and $ 0.3 million, respectively, for cash settled non-vested phantom unit awards and associated distribution equivalent rights

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and, for the years ended December 31, 2021, 2020, and 2019, paid cash of $ 4.4 million, $ 0.3 million, and $ 0.9 million, respectively, to settle liability-classified awards upon vesting under the CVR Partners LTIP.

Incentive Unit Awards — CVR Energy

CVR Energy grants awards of incentive units and dividend and distribution equivalent rights to certain of its employees and those of its subsidiaries, including CVR GP, who provide shared services for CVR Energy and its subsidiaries, including the Partnership.

CVR Energy grants awards of incentive units and dividend equivalent rights to certain of its employees and those of its subsidiaries, including CVR GP, who provide shared services for CVR Energy and its subsidiaries, including the Partnership.

Costs related to these incentive unit awards are allocated to the Partnership based on time spent on Partnership business.

Total compensation expense allocated to the Partnership for the years ended December 31, 2021, 2020, and 2019 related to the incentive units was $ 2.3 million, $ 0.4 million and $ 1.0 million, respectively.

The Partnership had no separate liabilities related to these incentive unit awards as of December 31, 2020, as the allocation of compensation expense for incentive unit awards is part of the amount charged to the Partnership under the Corporate MSA.

The Partnership had a liability of $ 1.4 million as of December 31, 2019, which is recorded in Other current liabilities.

For the years ended December 31, 2020 and 2018, the Partnership made reimbursements to CVR Energy of $ 2.2 million and $ 0.8 million, respectively, and no reimbursements for the year ended December 31, 2019 related to its allocated portion of CVR Energy’s incentive unit awards payments.

The Partnership had no separate liabilities related to these incentive unit awards as of December 31, 2021 and 2020, as the allocation of compensation expense for incentive unit awards is part of the amount charged to the Partnership under the Corporate MSA.

For the years ended December 31, 2021 and 2019, the Partnership had no reimbursements related to its allocated portion of CVR Energy’s incentive unit awards payments, respectively, and for the year ended December 31, 2020, the Partnership made reimbursements to CVR Energy of $ 2.2 million.

See Note 9 (“Related Party Transactions”) for further discussion of the Corporate MSA.

Performance Unit Awards

In connection with an employment agreement with the Partnership’s Executive Chairman dated November 1, 2017, CVR Energy entered into a performance unit award agreement (the “2017 Performance Unit Award Agreement”) on November 1, 2017, with our Executive Chairman representing the right to receive upon vesting, a cash payment equal to $ 10.0 million if the average closing price of CVR Energy’s common stock over the 30 day trading period from January 4, 2022 to February 15, 2022 is equal to or greater than $ 60 per share.

There were no compensation costs recognized for the years ended December 31, 2020 and 2019 under the 2017 Performance Unit Award Agreement.

Compensation costs recognized for the year ended December 31, 2018 were $ 0.4 million.

Under the 2017 Performance Unit Award Agreement, as of December 31, 2020, the Partnership had no outstanding liability, and an outstanding liability of $ 0.4 million as of December 31, 2019, which was recorded in Other current liabilities on the Consolidated Balance Sheets.

At December 31, 2020, there was approximately $ 2.3 million of total unrecognized compensation costs related to the 2017 Performance Unit Award Agreement.

Pursuant to the employment agreement, as amended, with the Partnership’s Executive Chairman, CVR Energy entered into a performance unit award agreement (the “2017 Performance Unit Award Agreement”) on November 1, 2017 with our Executive Chairman representing the right to receive upon vesting, a cash payment equal to $ 10.0 million if the average closing price of CVR Energy’s common stock over the 30 day trading period from January 4, 2022 to February 15, 2022 is equal to or greater than $ 60 per share.

Effective as of December 22, 2021, CVR Energy and our Executive Chairman entered into an amendment to the 2017 Performance Unit Award Agreement, which extended the end of the performance period thereunder to December 31, 2024, and changed the 30 day trading period on which the average closing price of CVR Energy’s common stock is based to January 6, 2025 through February 20, 2025.

Under the 2017 Performance Unit Award Agreement, for the year ended December 31, 2021, the Partnership recognized a benefit of $ 0.6 million.

No compensation costs were recognized for the years ended December 31, 2020 and 2019.

Under the 2017 Performance Unit Award Agreement, as of December 31, 2021 and 2020, the Partnership had no outstanding liability.

Once the performance parameters are probable of being met under the 2017 Performance Unit Award Agreement, the Partnership’s allocated portion of unrecognized compensation costs would be approximately $ 2.3 million.

Other Benefit Plans

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The Plans provide for a three-year vesting schedule for the Partnership’s matching contributions and contain a provision to count service with predecessor organizations.

The Partnership’s contributions under the Plans were approximately $ 1.9 million, $ 1.8 million, and $ 1.8 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Effective January 1, 2021, the matching contributions for the Plans have been suspended.

The Partnership did not have contributions under the Plans for the year ended December 31, 2021, as the Partnership’s matching contributions for the Plans were suspended effective January 1, 2021, and had approximately $ 1.9 million, and $ 1.8 million for the years ended December 31, 2020 and 2019, respectively.

The Partnership’s matching contributions for the Plans resumed effective January 1, 2022.

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Expenses associated with this agreement are included in Direct operating expenses (exclusive of depreciation and amortization), and, for the years ended December 31, 2021, 2020, and 2019, totaled approximately $ 3.9 million, $ 4.2 million, and $ 4.2 million, respectively.

In addition to the related party Coffeyville MSA, the Coffeyville Facility has pet coke supply agreements with multiple third-party refineries to purchase approximately 275,000 tons of pet coke at a fixed price for delivery at different dates through December 2021.

The Coffeyville Facility has historically purchased third-party pet coke based on spot purchases and supply

In addition to the related party Coffeyville MSA, the Coffeyville Facility has pet coke supply agreements with multiple third-party refineries to purchase approximately 327,000 tons of pet coke at a fixed price for delivery at different dates through

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

agreements in place at the time.

December 2022.

The Coffeyville Facility has historically purchased third-party pet coke based on spot purchases and supply agreements in place at the time.

The delivered cost of third-party pet coke purchases is included in Cost of materials and other and totaled approximately $ 17.4 million, $ 17.9 million, and $ 10.3 million for the years ended December 31, 2021, 2020, and 2019, respectively.

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The cost of utilities, including natural gas purchases, is included in Direct operating expenses (exclusive of depreciation and amortization).

Prior to entering into the new utility service agreement, the East Dubuque Facility had a utility service agreement with a third-party energy cooperative which included certain charges on a take-or-pay basis and amounts associated with this agreement totaled approximately $ 3.7 million and $ 10.6 million for the years ended December 31, 2019 and 2018, respectively.

(9) Related Party Transactions

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Coffeyville MSA

Effective January 1, 2020, the Conflicts Committee of the Board and the audit committee of CVR Energy approved, and CRNF and CRRM entered into the Coffeyville MSA which is comprised of various supply and service agreements effectively replacing, on substantially equivalent terms, other related party agreements in place during 2019 and 2018 as (the “Replaced Coffeyville Agreements”).

Effective January 1, 2020, the Conflicts Committee of the Board and the audit committee of CVR Energy approved, and CRNF and CRRM entered into, the Coffeyville MSA which is comprised of various supply and service agreements effectively replacing, on substantially equivalent terms, other related party agreements in place during 2019 (the “Replaced Coffeyville Agreements”).

In addition to affirming the terms and services described in the Replaced Coffeyville Agreements and resetting the durations thereof, as applicable, commencing January 1, 2020, the Coffeyville MSA provides for monthly payments, subject to netting, for all goods and services supplied under the Coffeyville MSA.

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• Raw Water and Facilities Sharing - CRNF and CRRM are each owners of an undivided one-half interest in and to the water rights and agree to (i) allocate raw water resources between CVR Energy’s Coffeyville refinery and our Coffeyville Facility and (ii) provide for the management of the water intake system which draws raw water from the Verdigris River for both our Coffeyville Facility and CVR Energy’s Coffeyville Refinery.

• Coke Supply - Our Coffeyville Facility purchases pet coke from CVR Energy’s Coffeyville Refinery which provides that CRRM must deliver, and the Coffeyville Facility must purchase, during each calendar year an annual required amount of pet coke equal to the lesser of (i) 100 percent of the pet coke or (ii) 500,000 tons of pet coke.

December 31, 2021 | 68

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

calendar month, more than 41,667 tons of pet coke is produced and available for purchase, then the Coffeyville Facility will have the option to purchase the excess at the purchase price provided for in the agreement.

amount of pet coke equal to the lesser of (i) 100 percent of the pet coke or (ii) 500,000 tons of pet coke.

If during a calendar month, more than 41,667 tons of pet coke is produced and available for purchase, then the Coffeyville Facility will have the option to purchase the excess at the purchase price provided for in the agreement.

If the option is declined, CRRM may sell the excess to a third-party.

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Corporate MSA

Also effective January 1, 2020, the Conflicts Committee of the Board and the audit committee of CVR Energy approved, and the parties entered into the Corporate MSA between CVR Services and certain of its affiliates, including CVR Energy, CVR GP and the Partnership and its subsidiaries, which is comprised of various management and service agreements effectively replacing other related party agreements, on substantially equivalent terms, in place for 2019 and 2018 as (the “Replaced Corporate Agreements”).

In addition to affirming the terms and services described in the Replaced Corporate Agreements and resetting the durations thereof, as applicable, commencing January 1, 2020, the Corporate MSA provides for payment by each service recipient under the Corporate MSA of a monthly fee for goods and services supplied under the Corporate MSA, subject to netting and an annual true up, as well as pass-through of any direct costs incurred on behalf of a service recipient without markup.

Either CVR Services or CVR GP may terminate the Corporate MSA upon at least 90 days notice.

Under the Corporate MSA, CVR GP and the Partnership and its subsidiaries obtain certain management and other professional services from CVR Services, including the following, among others:

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Sales to related parties (1)

$ 308 $ 993 $ 119

Purchases from related parties (2)

Prepaid expenses (3) $ — $ 249

41,717 26,276 30,876

Due to related parties (3)

$ 3,580 $ 694

(1) Sales to related parties, included in Net sales, consist primarily of sales of feedstocks and services to CRRM under the Coffeyville MSA.

(2) Purchases from related parties, included in Cost of materials and other, Direct operating expenses (exclusive of depreciation and amortization), and Selling, general and administrative expenses, consist primarily of pet coke and hydrogen purchased from CRRM under the Coffeyville MSA.

(3) Prepaid expenses, included in Prepaid expenses and other current assets, are amounts paid for feedstocks and services provided by CRRM under the Coffeyville MSA.

(4) Due to related parties, included in Accounts payable to affiliates, Other current liabilities, and Other long-term liabilities, consist primarily of amounts payable for feedstocks and other supplies and services provided by CRRM and CVR Services under the Coffeyville MSA and Corporate MSA.

(3) Due to related parties, included in Accounts payable to affiliates, consist primarily of amounts payable for feedstocks and other supplies and services provided by CRRM and CVR Services under the Coffeyville MSA and Corporate MSA.

Environmental Agreement

6 unchanged sentences

In addition, this agreement will automatically renew for successive five-year terms, provided that we may terminate the agreement during any renewal term with at least 180 days written notice.

We will pay CRT $ 1.00 per year for rent, $ 4.00 per ton of UAN placed into the terminal, and $ 4.00 per ton of UAN taken out of the terminal.

Under the terms of this agreement, we will pay CRT $ 1.00 per year for rent, $ 4.00 per ton of UAN placed into the terminal, and $ 4.00 per ton of UAN taken out of the terminal.

Property Exchange

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

There were no distributions declared or paid by the Partnership during the year ended December 31, 2020 related to the fourth quarter of 2019 or the first, second, and third quarters of 2020.

No distributions were declared for the fourth quarter of 2020.

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

Of these distributed amounts, CVR Energy received $ 15.6 million.

During the year ended December 31, 2018, the Partnership did no t pay distributions.

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, the Partnership 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.

(10) Supplemental Cash Flow Information

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

Cash flows related to income taxes, interest, leases, and capital expenditures and deferred financing costs included in accounts payable are as follows:

Year Ended December 31,

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Change in capital expenditures included in accounts payable 5,092 ( 2,167 ) 1,618

(1) The lease standard was adopted on January 1, 2019 on a prospective basis.

Therefore, only 2020 and 2019 are applicable to be included within the table above.

Change in deferred financing costs included in accounts payable 675 — —

December 31, 2021 | 71

1 unchanged sentence

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 8. Financial Statements and Supplementary Data