CVR PARTNERS, LP 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with our consolidated financial statements and related notes and with the statistical information and financial data included elsewhere in this Report, as well as Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors” of this Report. 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. This discussion and analysis covers the years ended December 31, 2024 and 2023 and discusses year-to-year comparisons between such periods. The discussions of the year ended December 31, 2022 and year-to-year comparisons between the years ended December 31, 2023 and 2022 are not included in this Annual Report on Form 10-K but can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 21, 2024, and such discussions are incorporated by reference into this Report. Reflected in this discussion and analysis is how management views the Partnership’s current financial condition and results of operations along with key external variables and management actions that may impact the Partnership. This discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this Report. Partnership Overview CVR Partners is a Delaware limited partnership formed in 2011 by CVR Energy, Inc. (“CVR Energy”) to own, operate, and grow its nitrogen fertilizer business. The Partnership produces and distributes nitrogen fertilizer products, which are used by farmers to improve the yield and quality of their crops, primarily corn and wheat. The Partnership produces these products at two manufacturing facilities, one located in Coffeyville, Kansas operated by its wholly owned subsidiary, Coffeyville Resources Nitrogen Fertilizers, LLC (“CRNF”) (the “Coffeyville Facility”) and one located in East Dubuque, Illinois operated by its wholly owned subsidiary, East Dubuque Nitrogen Fertilizers, LLC (“EDNF”) (the “East Dubuque Facility”, and together with the Coffeyville Facility, the “Facilities”). Our principal products are ammonia and urea ammonium nitrate (“UAN”). All of our products are sold on a wholesale basis. 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. Additionally, as the context may require, references to CVR Energy may refer to CVR Energy and its consolidated subsidiaries which include its petroleum and renewables refining, marketing, and logistics operations. Strategy and Goals The Partnership has adopted Mission and Core Values, which articulate the Partnership’s expectations for how it and its employees do business each and every day. Mission and Core Values Our Mission is to be a top tier North American nitrogen-based fertilizer company as measured by safe and reliable operations, superior performance and profitable growth. The foundation of how we operate is built on five core Values: • Safety - We always put safety first. The protection of our employees, contractors and communities is paramount. We have an unwavering commitment to safety above all else. If it’s not safe, then we don’t do it. December 31, 2024 | 34 Table of Contents • Environment - We care for our environment. Complying with all regulations and minimizing any environmental impact from our operations is essential. We understand our obligation to the environment and that it’s our duty to protect it. • Integrity - We require high business ethics. We comply with the law and practice sound corporate governance. We only conduct business one way—the right way with integrity. • Corporate Citizenship - We are proud members of the communities where we operate. We are good neighbors and know that it’s a privilege we can’t take for granted. We seek to make a positive economic and social impact through our financial donations and the contributions of time, knowledge and talent of our employees to the places where we live and work. • Continuous Improvement - We believe in both individual and team success. We foster accountability under a performance-driven culture that supports creative thinking, teamwork, diversity and personal development so that employees can realize their maximum potential. We use defined work practices for consistency, efficiency and to create value across the organization. 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. Strategic Objectives We have outlined the following strategic objectives to drive the accomplishment of our mission: • Environmental, Health & Safety (“EH&S”) - We aim to achieve continuous improvement in all EH&S areas through ensuring our people’s commitment to environmental, health and safety comes first, the refinement of existing policies, continuous training, and enhanced monitoring procedures. • Reliability - Our goal is to achieve industry-leading utilization rates at both of our facilities through safe and reliable operations. We are focusing on improvements in day-to-day facility operations, identifying alternative sources for facility inputs to reduce lost time due to third-party operational constraints, and optimizing our commercial and marketing functions to maintain facility operations at their highest level. • Market Capture - We continuously evaluate opportunities to improve the facilities’ realized pricing at the gate and reduce variable costs incurred in production to maximize our capture of market opportunities. • Financial Discipline - We strive to be as efficient as possible by maintaining low operating costs and disciplined deployment of capital. In January 2025, we published a 2023 Environmental, Social & Governance Report (“2023 ESG Report”), which continues to benchmark performance against specific Sustainability Accounting Standards Board metrics and is available at CVR Partner’s website at www.CVRPartners.com. The 2023 ESG Report does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K or any other report we file with (or furnish to) the Securities and Exchange Commission (the “SEC”), whether made before or after the date of this Annual Report on Form 10-K. Industry Factors and Market Indicators 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. 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 world grain demand and production levels, changes in world population, the cost and availability of fertilizer transportation infrastructure, weather conditions, the availability of imports, the availability and price of feedstocks to produce nitrogen fertilizer, and the extent of government intervention in agriculture markets, among other factors. December 31, 2024 | 35 Table of Contents Nitrogen fertilizer prices are also affected by local factors, including local market conditions and the operating levels of competing facilities. An expansion or upgrade of competitors’ facilities, new facility development, political and economic developments, and other factors are likely to continue to play an important role in nitrogen fertilizer industry economics. These factors can impact, among other things, the level of inventories in the markets, resulting in price and product margin volatility. Moreover, the industry typically experiences seasonal fluctuations in demand for nitrogen fertilizer products. General Business Environment The Partnership believes the general business environment in which it operates will continue to remain volatile, driven by uncertainty around the availability and prices of its feedstocks, demand for and prices of its products, inflation, and existing and potential future global supply disruptions. As a result, future operating results and current and long-term financial conditions could be negatively impacted if economic conditions remain volatile and/or decline. The Partnership is not able at this time to predict the extent to which these conditions may have a material, or any, effect on its financial or operational results in future periods. Regulatory Environment - Certain governmental regulations and incentives associated with the automobile transportation and agricultural industries, including the ones related to corn-based ethanol and sustainable aviation fuel production or consumption, can impact, and have directly impacted, our business. In June 2023, the United States Environmental Protection Agency (“EPA”) announced the renewable volume obligations for 2023, 2024, and 2025, which maintained the conventional biofuel blending level at 15 billion gallons. These actions lead us to believe that the demand on food, in particular corn, for fuel will remain strong for the foreseeable future and support farmer economics that incentivize the use of nitrogen-based fertilizers. In contrast, in March 2024, the EPA finalized new motor vehicle emission standards for light-, medium-, and heavy-duty vehicles for model year 2027 and beyond, which could significantly reduce the use of internal combustion engine vehicles and the demand for liquid fuels, including ethanol. In 2023, production of ethanol consumed approximately 37% of the annual United States corn crop used by the market. There have been several proposed and enacted climate-related rules and compliance requirements at federal, state, and international levels. While the Biden Administration had advanced significant climate-related initiatives, including stricter EPA motor vehicle emissions standards and the SEC’s proposed climate risk disclosure rule, recent changes under the Trump Administration following the 2024 U.S. presidential election has begun to and may further shift regulatory priorities. Through executive orders and regulatory rollbacks, certain of these initiatives have been curtailed or reevaluated, creating a more uncertain regulatory landscape, which may materially impact our business, operations, compliance costs, results and market stability. Geopolitical Matters - The Middle East conflict, which began in October 2023 and impacted global fertilizer and agriculture markets, alongside other conflicts, like the ongoing Russia-Ukraine war, continue to present significant geopolitical risks to global markets as does the potential for future trade wars and the potential changes in U.S. economic trade policy. These concerns, including the enforcement of sanctions, could lead to disruptions in the production and trade of fertilizer, grains, and feedstock through various means, such as trade restrictions. The ultimate outcome of these conflicts and/or economic policy, or further escalation or expansion thereof, and any associated market disruptions are difficult to predict and may affect our business, operations, and cash flows in unforeseen ways. Market Indicators While there is risk of shorter-term volatility given the inherent nature of the commodity cycle and governmental and geopolitical risks, 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 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 United States over the longer term. 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 December 31, 2024 | 36 Table of Contents 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 shown by the chart presented below. The relationship between the total acres planted for both corn and soybeans 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 14 billion pounds of soybean oil is expected to be used in producing cleaner renewable fuels in marketing year 2024/2025. Multiple refiners have announced renewable diesel expansion projects for 2025 and beyond, which should only increase the demand for soybeans and potentially for corn and canola. The United States Department of Agriculture (“USDA”) estimates that in spring 2024 farmers planted 90.7 million corn acres, representing a decrease of 4.1% as compared to 94.6 million corn acres in 2023. Planted soybean acres for spring 2024 are 87.1 million, representing an increase of 4.2% as compared to 83.6 million soybean acres in 2023. The combined corn and soybean planted acres of 177.8 million in 2024 is in line with the acreage planted in 2023. Due to lower input costs in 2024 for corn planting and the relative grain prices of corn versus soybeans, economics favored planting corn compared to soybeans in 2024. Inventory levels of corn and soybeans are expected to be supportive of grain prices into the spring of 2025. Ethanol is blended with gasoline to meet renewable fuel standard requirements and for its octane value. Since 2010, ethanol production has historically consumed 37% of the U.S. corn crop used by the market, so demand for corn generally rises and falls with ethanol demand, as shown by the charts below, through December 31, 2024. U.S. Plant Production of Fuel Ethanol (1) Corn and Soybean Planted Acres (2) (1) Information used within this chart was obtained from the U.S. Energy Information Administration (“EIA”) through December 31, 2024. (2) Information used within this chart was obtained from the USDA, National Agricultural Statistics Services as of December 31, 2024. Weather continues to be a critical variable for crop production. Even with high planted acres and above trendline yields per acre for corn in the United States, global inventory levels for corn and soybeans remain near historical 10-year averages and prices have remained elevated. Demand for nitrogen fertilizer, as well as other crop inputs, was strong for the spring 2024 planting season, primarily due to elevated grain prices and favorable weather conditions for planting. Fertilizer input costs have been volatile since the fall of 2021. Natural gas prices were elevated in the fall of 2022 due to shortages in Europe and demand being driven by building natural gas storage for winter. Winter 2023/2024 weather was warmer than average in Europe and when combined with natural gas conservation measures caused demand and prices for natural gas in Europe to fall significantly in the first quarter of 2024 and remain below the 2021/2022 price levels throughout 2024. The decline in natural gas prices, and the resulting reversal of capacity curtailments, among other factors, has led to a significant reduction in the price for nitrogen fertilizer from peak prices. While we expect that natural gas prices might remain below the elevated levels experienced in 2022 in the near term, we believe that the structural shortage of natural gas in Europe will continue to be a source of volatility through at least 2026. Although pet coke prices had been elevated since 2021 due to December 31, 2024 | 37 Table of Contents higher natural gas prices compared to historical levels, as natural gas prices remained low in 2024, third-party pet coke prices declined into 2024 and fell further into 2025. Partnership Initiatives The Partnership is nearing completion of engineering studies on the potential to utilize natural gas as an optional feedstock to pet coke at its Coffeyville Facility. Based on these studies, we believe the Coffeyville Facility could utilize either natural gas or pet coke to produce nitrogen fertilizer by making certain modifications to the facility. If this project is approved by the board of directors of our general partner (the “Board”) and successfully implemented, it could allow the Partnership to choose the optimal feedstock mix for production and would make the Coffeyville Facility the only nitrogen fertilizer facility in the United States with that feedstock flexibility. As part of growth capital projects, the Partnership has undertaken several initiatives to continually improve reliability of its Facilities. In December 2024, an additional piece of oxygen equipment was installed to provide better reliability of a third-party air separation plant which supplies contract volumes of oxygen, nitrogen, and compressed dry air to the Coffeyville Facility gasifiers. The charts below show relevant market indicators by month through December 31, 2024: Ammonia and UAN Market Pricing (1) (1) Information used within this chart was obtained from various third-party sources including Green Markets (a Bloomberg Company), Pace Petroleum Coke Quarterly, and the EIA, amongst others. December 31, 2024 | 38 Table of Contents Natural Gas Market Pricing (1) Pet Coke Market Pricing (1) (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. Results of Operations The following should be read in conjunction with the information outlined in 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, 2024, 2023, and 2022. 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 of ammonia produced divided by capacity. Utilization is presented solely on ammonia production, rather than on 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 production primarily focused on ammonia upgrade capabilities, we believe this measure provides a meaningful view of how we operate. December 31, 2024 | 39 Table of Contents Ammonia Utilization Rate On a consolidated basis, utilization decreased 4% to 96% for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the 14-day planned outage at the Coffeyville Facility during the first quarter of 2024 and other minor unplanned outages at the Facilities (the “ 2024 Outages”) in the current period. 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. 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. Ammonia Sales Volumes and Pricing UAN Sales Volumes and Pricing For the year ended December 31, 2024, total product sales volumes were unfavorable driven by reduced production volumes resulting from the 2024 Outages in the current period. For the year ended December 31, 2024, total product sales were unfavorable driven by sales price decreases of 16% for ammonia and 20% for UAN during the year. Ammonia and UAN sales prices were unfavorable primarily due to lower natural gas prices reducing input costs and lower planted acres of corn in the U.S. Production Volumes - Gross tons of ammonia represent the total ammonia produced, including ammonia produced that was upgraded into other fertilizer products. Net tons available for sale represents the ammonia available for sale that was not December 31, 2024 | 40 Table of Contents upgraded into other fertilizer products. The table below presents these metrics for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, (in thousands of tons) 2024 2023 2022 Ammonia (gross produced) 836 864 703 Ammonia (net available for sale) 270 270 213 UAN 1,273 1,369 1,140 Feedstock - Our Coffeyville Facility utilizes a pet coke gasification process to produce nitrogen fertilizer. Our East Dubuque Facility uses natural gas in its production of ammonia. The table below presents these feedstocks for the Facilities for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 2023 2022 Petroleum coke used in production (thousands of tons) 517 518 425 Petroleum coke used in production (dollars per ton) $ 59.69 $ 78.14 $ 52.88 Natural gas used in production (thousands of MMBtus) (1) 8,667 8,462 6,905 Natural gas used in production (dollars per MMBtu) (1) $ 2.56 $ 3.42 $ 6.66 Natural gas in cost of materials and other (thousands of MMBtus) (1) 7,755 8,671 6,701 Natural gas in cost of materials and other (dollars per MMBtu) (1) $ 2.50 $ 3.84 $ 6.37 (1) The feedstock natural gas shown above does not include natural gas used for fuel. The cost of fuel natural gas is included in Direct operating expenses (exclusive of depreciation and amortization). Financial Highlights Overview - For the year ended December 31, 2024, the Partnership’s operating income and net income were $90.4 million and $60.9 million, respectively, compared to operating income and net income of $201.4 million and $172.4 million, respectively, for the year ended December 31, 2023. These decreases were driven primarily by lower product sales prices attributable to natural gas prices reducing input costs and driving an overall decrease in market prices and unfavorable product sales volume driven by reduced production volumes resulting from the 2024 Outages in the current period, partially offset by favorable utility costs due to lower natural gas and electricity prices. Net Sales Operating Income December 31, 2024 | 41 Table of Contents Net Income EBITDA (1) (1) See “Non-GAAP Reconciliations” section below for reconciliations of the non-GAAP measures shown above. Net Sales - For the year ended December 31, 2024, net sales was $525.3 million compared to $681.5 million for the year ended December 31, 2023. This decrease was primarily due to unfavorable UAN and ammonia pricing conditions and sales volumes which lowered revenues by $103.4 million and $47.1 million, respectively. For the years ended December 31, 2024 and 2023, net sales included $36.3 million and $42.1 million in freight revenue and $16.6 million and $18.2 million in other revenue, respectively. The following table demonstrates the impact of changes in sales volumes and pricing for the primary components of net sales, excluding urea products, freight, and other revenue, for the year ended December 31, 2024 compared to the year ended December 31, 2023: (in thousands) Price Variance Volume Variance UAN $ (77,638) $ (41,805) Ammonia (25,737) (5,315) For the year ended December 31, 2024 compared to the year ended December 31, 2023, ammonia and UAN sales prices were unfavorable primarily due to lower natural gas prices reducing input costs and driving an overall decrease in market prices, paired with lower planted corn acres in the U.S. Total product sales volumes were unfavorable driven by reduced production volumes resulting from the 2024 Outages in the current period. December 31, 2024 | 42 Table of Contents Cost of Materials and Other Direct Operating Expenses (1) (1) Exclusive of depreciation and amortization expense. Cost of Materials and Other - For the year ended December 31, 2024, cost of materials and other was $104.1 million compared to $134.4 million for the year ended December 31, 2023. The decrease was driven primarily by lower pet coke and natural gas feedstock costs, as discussed above, combined with favorable inventory impacts in the current period. Direct Operating Expenses (exclusive of depreciation and amortization) - For the year ended December 31, 2024, direct operating expenses (exclusive of depreciation and amortization) were $214.2 million compared to $234.9 million for the year ended December 31, 2023. The decrease was primarily due to favorable utility costs due to lower natural gas and electricity prices combined with favorable inventory impacts in the current period. Depreciation and Amortization Selling, General, and Administrative Expenses Depreciation and Amortization Expense - For the year ended December 31, 2024, depreciation and amortization expense was $88.1 million compared to $79.7 million for the year ended December 31, 2023. This increase was primarily due to accelerated depreciation related to planned asset retirements, including granular plant production assets, and due to additions to property, plant, and equipment during the current period, partially offset by fluctuations in depreciation capitalized to inventory and retirement of fully depreciated assets. Selling, General, and Administrative Expenses - For the year ended December 31, 2024, Selling, general and administrative expenses was $28.4 million compared to $29.5 million for the year ended December 31, 2023. The decrease was primarily December 31, 2024 | 43 Table of Contents related to lower share-based compensation due to a decrease in market prices for CVR Partners’ common units in the current period, partially offset by an increase in other personnel costs. Non-GAAP Measures Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our financial information presented in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures are important factors in assessing our operating results and profitability and include the performance and liquidity measures defined below. The following are non-GAAP measures we present for the years ended December 31, 2024, 2023, and 2022: EBITDA - Net income (loss) before (i) interest expense, net, (ii) income tax expense (benefit) and (iii) depreciation and amortization expense. Adjusted EBITDA - EBITDA adjusted for certain significant noncash 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. Available Cash for Distribution - EBITDA for the quarter excluding noncash income or expense items (if any), for which adjustment is deemed necessary or appropriate by the Board in its sole discretion, less (i) reserves for maintenance capital expenditures, debt service and other contractual obligations and (ii) reserves for future operating or capital needs (if any), in each case, that the Board deems necessary or appropriate in its sole discretion. Available Cash for Distribution may be increased by the release of previously established cash reserves, if any, and other excess cash, at the discretion of the Board. We present these measures because we believe they may help investors, analysts, lenders, and ratings agencies analyze our results of operations and liquidity in conjunction with our GAAP results, including, but not limited to, our operating performance as compared to other publicly traded companies in the fertilizer industry, without regard to historical cost basis or financing methods, and our ability to incur and service debt and fund capital expenditures. Non-GAAP measures have important limitations as analytical tools because they exclude some, but not all, items that affect net earnings and operating income. These measures should not be considered substitutes for their most directly comparable GAAP financial measures. Refer to the “Non-GAAP Reconciliations” included herein for reconciliation of these amounts. Due to rounding, numbers presented within this section may not add or equal to numbers or totals presented elsewhere within this document. Factors Affecting Comparability of Our Financial Results Major Scheduled Turnaround Activities Our results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future due to expenses incurred as part of planned turnarounds. We incurred turnaround expenses of $0.5 million, $1.8 million, and $33.4 million during the years ended December 31, 2024, 2023, and 2022, respectively. The next planned turnarounds are currently scheduled to commence in the fourth quarter of 2025 at the Coffeyville Facility and in 2026 at the East Dubuque Facility. December 31, 2024 | 44 Table of Contents Non-GAAP Reconciliations Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Available Cash for Distribution Year Ended December 31, (in thousands) 2024 2023 2022 Net income $ 60,900 $ 172,433 $ 286,801 Interest expense, net 29,827 28,653 34,065 Income tax expense 77 289 160 Depreciation and amortization 88,096 79,720 82,137 EBITDA and Adjusted EBITDA 178,900 281,095 403,163 Adjustments (Reserves)/Releases: Accrued interest expense (excluding capitalized interest) (34,173) (33,885) (34,733) Future operating needs (1) — (6,350) (2,700) Capital expenditures (2) (59,114) (56,400) (40,794) Turnaround expenditures, net (3) (12,947) (11,543) 13,011 Equity method investment (4) (1,155) 15,776 — Principal payments on senior secured notes and deferred financing costs — (500) (65,814) Repurchase of common units — — (12,398) Available cash for distribution (5) $ 71,511 $ 188,193 $ 259,735 Common units outstanding 10,570 10,570 10,681 (1) Amount consists of adjustment of expenses incurred by the city of Coffeyville during winter storm Uri in 2021 and cash impacts thereof and reserves established by the Board for potential future cash needs related to nitrogen fertilizer seasonality and feedstock price volatility. (2) Amount consists of maintenance capital expenditures, including additional reserves for future growth projects of $29.1 million and $28.4 million for the years ended December 31, 2024 and 2023. There were no reserves for future growth projects for year ended December 31, 2022. (3) Amount consists of reserves for periodic, planned turnarounds, net of expenditures incurred in the period. (4) Amount consists of distributions received by the Partnership adjusted for the amortization of deferred revenue related to the 45Q Transaction. (5) Amount represents the cumulative available cash for distribution based on full year results. However, available cash for distribution is calculated quarterly, with distributions (if any) being paid in the following period. The Partnership declared and paid cash distributions of $1.68, $1.92, $1.90, and $1.19 per common unit related to the fourth quarter of 2023, and the first, second, and third quarters of 2024, respectively, and declared a cash distribution of $1.75 per common unit related to the fourth quarter of 2024, to be paid in March 2025. Liquidity and Capital Resources Our principal source of liquidity has historically been and continues to be cash from operations, which can include cash advances from customers resulting from prepay contracts. As further discussed below, our principal uses of cash are for working capital, capital expenditures, funding our debt service obligations, and paying distributions to our unitholders. When considering the market conditions and current geopolitical matters, we currently believe that our cash from operations and existing cash and cash equivalents, along with borrowings and reserves, 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 operating performance, as well as general economic, political, financial, competitive, and other factors, some of which may be beyond our control. Depending on the needs of our business, contractual limitations, and market conditions, we may from time to time seek to issue equity securities, incur additional debt, issue debt securities, or redeem, repurchase, refinance, or retire our outstanding December 31, 2024 | 45 Table of Contents debt through privately negotiated transactions, open market repurchases, redemptions, exchanges, tender offers or otherwise. 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. The Partnership and its subsidiaries were in compliance with all covenants under their respective debt instruments as of December 31, 2024 and through the date of filing, as applicable. Cash and Other Liquidity As of December 31, 2024, we had cash and cash equivalents of $90.9 million and, combined with $38.9 million available under our ABL Credit Facility, we had total liquidity of $129.8 million as of December 31, 2024. As of December 31, 2023, we had $45.3 million in cash and cash equivalents and, combined with $39.0 million available under our ABL Credit Facility, we had total liquidity of $84.3 million. Long-term debt consisted of the following: December 31, (in thousands) 2024 2023 6.125% Senior Secured Notes, due June 2028 $ 550,000 $ 550,000 Unamortized debt issuance costs (2,152) (2,692) Total long-term debt $ 547,848 $ 547,308 As of December 31, 2024, the Partnership had outstanding its 6.125% Senior Secured Notes, due June 2028 (the “2028 Notes”) and the ABL Credit Facility, the proceeds of which may be used to fund working capital and capital expenditures, and for other general corporate purposes. Refer to Part II, Item 8, Note 8 (“Long-Term Debt”) of this Report for further information. Capital Spending We divide capital spending needs into two categories: maintenance and growth. Maintenance capital spending includes non-discretionary maintenance projects and projects required to comply with environmental, health, and safety regulations. Growth capital projects generally involve an expansion of existing capacity, reliability improvements, and/or reducing direct operating expenses. We undertake growth capital spending based on the expected return on incremental capital employed, which is typically funded by reserves taken in prior years. Our total capital expenditures for the years ended December 31, 2024 and 2023, along with our estimated expenditures for 2025 are as follows: Year Ended December 31, Estimated (in thousands) 2024 2023 2025 Maintenance capital $ 30,014 $ 28,025 $35,000 - 45,000 Growth capital 7,049 1,056 20,000 - 25,000 Total capital expenditures $ 37,063 $ 29,081 $55,000 - 70,000 Our estimated capital expenditures are subject to change due to changes in capital projects’ cost, scope, and completion time. For example, we may experience changes in labor or equipment costs necessary to comply with government regulations or to complete projects that sustain or improve the profitability of the Facilities. We may also accelerate or defer some capital expenditures from time to time. The Board determines capital spending for CVR Partners. We will continue to monitor market conditions and make adjustments, if needed, to our current capital spending or turnaround plans. We incurred turnaround expenses of $0.5 million, $1.8 million, and $33.4 million during the years ended December 31, 2024, 2023, and 2022, respectively. The next planned turnarounds are currently scheduled to commence in the fourth quarter of 2025 at the Coffeyville Facility and in 2026 at the East Dubuque Facility. December 31, 2024 | 46 Table of Contents Cash Requirements The following table summarizes our known contractual obligations and other commercial commitments as of December 31, 2024 that are expected to be paid within the next year and thereafter: Payments Due by Period (in thousands) Short-Term Long-Term Total Debt obligations (1) $ — $ 550,000 $ 550,000 Interest payments related to debt obligations (2) 33,941 84,915 118,856 Operating lease liabilities (3) 4,996 14,346 19,342 Finance lease obligations (3) 3,145 41,452 44,597 Purchase commitments (4) 36,319 60,273 96,592 Transportation agreements (5) 3,833 5,281 9,114 Total cash requirements $ 82,234 $ 756,267 $ 838,501 (1) Debt obligations consist of the 2028 Notes as of December 31, 2024. (2) Interest payments related to debt obligations consist of interest payments for our long-term debt outstanding as of December 31, 2024 and commitment fees on the unutilized commitments of the ABL Credit Facility. (3) Operating lease liabilities and finance lease obligations are described in Part II, Item 8, Note 6 (“Leases”) of this Report. (4) Consists primarily of purchase obligations for pet coke, oxygen, nitrogen, and other feedstocks, as well as water and utilities usage. (5) Includes purchase obligations related to the transportation of feedstocks. Distributions to Unitholders The current policy of the Board is to distribute all Available Cash for Distribution, as determined by the Board in its sole discretion, the Partnership generates on a quarterly basis. The Board will determine Available Cash for Distribution for each quarter following the end of such quarter. Available Cash for Distribution for each quarter is calculated as EBITDA for the quarter excluding noncash income or expense items (if any), for which adjustment is deemed necessary or appropriate by the Board in its sole discretion, less (i) reserves for maintenance capital expenditures, debt service and other contractual obligations, and (ii) reserves for future operating or capital needs (if any), in each case, that the Board deems necessary or appropriate in its sole discretion. Available Cash for Distribution may be increased by releasing previously established cash reserves, if any, and other excess cash, at the discretion of the Board. Distributions, if any, including the payment, amount, and timing thereof, and the Board’s distribution policy, including the definition of Available Cash for Distribution and reserves relating thereto, are subject to change at the discretion of the Board. The following table presents quarterly distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, during 2024, 2023, and 2022 (amounts presented in the table below may not add to totals presented due to rounding): Quarterly Distributions Paid (in thousands) Related Period Date Paid Quarterly Distributions Per Common Unit Public Unitholders CVR Energy Total 2023 - 4th Quarter March 11, 2024 $ 1.68 $ 11,218 $ 6,539 $ 17,757 2024 - 1st Quarter May 20, 2024 1.92 12,821 7,472 20,293 2024 - 2nd Quarter August 19, 2024 1.90 12,688 7,395 20,082 2024 - 3rd Quarter November 18, 2024 1.19 7,946 4,632 12,578 Total 2024 quarterly distributions $ 6.69 $ 44,673 $ 26,037 $ 70,710 2022 - 4th Quarter March 13, 2023 $ 10.50 $ 70,115 $ 40,866 $ 110,981 2023 - 1st Quarter May 22, 2023 10.43 69,647 40,594 110,241 2023 - 2nd Quarter August 21, 2023 4.14 27,646 16,113 43,759 2023 - 3rd Quarter November 20, 2023 1.55 10,350 6,033 16,383 Total 2023 quarterly distributions $ 26.62 $ 177,759 $ 103,605 $ 281,364 December 31, 2024 | 47 Table of Contents Quarterly Distributions Paid (in thousands) Related Period Date Paid Quarterly Distributions Per Common Unit Public Unitholders CVR Energy Total 2021 - 4th Quarter March 14, 2022 $ 5.24 $ 35,576 $ 20,394 $ 55,970 2022 - 1st Quarter May 23, 2022 2.26 15,091 8,796 23,887 2022 - 2nd Quarter August 22, 2022 10.05 67,109 39,115 106,225 2022 - 3rd Quarter November 21, 2022 1.77 11,819 6,889 18,708 Total 2022 quarterly distributions $ 19.32 $ 129,597 $ 75,193 $ 204,790 For the fourth quarter of 2024, the Partnership, upon approval by the Board on February 18, 2025, declared a distribution of $1.75 per common unit, or $18.5 million, which is payable March 10, 2025 to unitholders of record as of March 3, 2025. Of this amount, CVR Energy and IEP will receive approximately $6.8 million and $0.3 million, respectively, with the remaining amount payable to public unitholders. Capital Structure On May 6, 2020, the Board, on behalf of the Partnership, authorized a unit repurchase program, which was increased on February 22, 2021 (the “Unit Repurchase Program”). The Unit Repurchase Program authorized the Partnership to repurchase up to $20 million of the Partnership’s common units. On February 20, 2024, the Board, on behalf of the Partnership, terminated the nominal authority remaining under the Unit Repurchase Program. From authorization through March 2022, CVR Partners repurchased, on a split-adjusted basis, 759,250 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 $20.0 million, exclusive of transaction costs, or an average price of $26.33 per common unit. Prior to the termination of the Unit Repurchase Program in 2024 and for the year ended December 31, 2023, CVR Partners did not repurchase any common units. Cash Flows The following table sets forth our cash flows for the periods indicated below: Year Ended December 31, (in thousands) 2024 2023 2022 Net cash provided by (used in): Operating activities $ 150,541 $ 243,526 $ 301,464 Investing activities (31,892) (2,722) (44,623) Financing activities (73,071) (281,864) (283,018) Net increase (decrease) in cash and cash equivalents $ 45,578 $ (41,060) $ (26,177) Cash Flows from Operating Activities The change in net cash flows from operating activities for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to a decrease in net income of $111.5 million caused by lower sales prices attributable to natural gas prices reducing input costs and driving an overall decrease in market prices and unfavorable sales volume driven by reduced production volumes resulting from the 2024 Outages in the current period. This is partially offset by a decrease in working capital of $13.8 million in 2024 compared to 2023 primarily due to favorable changes in accounts payable and other current liabilities, partially offset by unfavorable changes in inventory. Cash Flows from Investing Activities The change in net cash used in investing activities for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to a decrease in distributions received from CVR Partners’ equity method investment of $16.3 million in 2024 compared to 2023 and an increase in capital expenditures of $12.9 million during 2024 resulting from an increase in various capital projects in the current period compared to 2023. December 31, 2024 | 48 Table of Contents Cash Flows from Financing Activities The change in net cash used in financing activities for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to a $210.7 million decrease in cash distributions in 2024 compared to 2023. Recent Accounting Pronouncements 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 We prepare our consolidated financial statements in accordance with GAAP requiring management to make judgments, assumptions, and estimates based on the best available information at the time. Accounting estimates are considered to be critical if (1) the nature of the estimates and assumptions is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and (2) the impact of the estimates and assumptions on financial condition or operating performance is material. Actual results could differ from the estimates and assumptions used. Inventory Valuation The cost of our fertilizer product inventories is determined under the first-in, first-out (“FIFO”) method and our FIFO inventories are carried at the lower of cost or net realizable value. We compare the estimated realizable value of inventories to their cost by product. 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 volumes remain unaccounted for, current management pricing estimates for fertilizer products. Management’s estimate for current pricing reflects up-to-date pricing in the 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. There were no inventory adjustments recognized during the years ended December 31, 2024, 2023, and 2022. 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. Impairment of Long-lived Assets 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 may be 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. In addition, when preparing the expected future cash flows or estimating the fair value of impaired assets, we make several estimates that include subjective assumptions related to future sales volumes, commodity prices, operating costs, discount rates, and capital expenditures, among others.