Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________
Form 10-K
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number: 001-35120
_____________________________________________________________
CVR Partners, LP
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
56-2677689
(I.R.S. Employer
Identification No.)
2277 Plaza Drive, Suite 500, Sugar Land, Texas 77479
(Address of principal executive offices) (Zip Code)
(281) 207-3200
(Registrant’s telephone number, including area code)
_____________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of each exchange on which registered
Common units representing limited partner interests
UAN
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☑ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting company
☐
☐
Accelerated filer
Emerging growth company
☑
☐
Non-accelerated filer
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm prepared or
issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
At June 30, 2023, the aggregate market value of the voting common units held by non-affiliates of the registrant was approximately $535.7 million based
upon the closing price of its common units on the New York Stock Exchange Composite tape. As of February 16, 2024, there were 10,569,637 of the
registrant’s common units outstanding.
TABLE OF CONTENTS
CVR Partners, LP
Annual Report on Form 10-K
PART I
PART III
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4. Mine Safety Disclosures
7
16
31
31
32
33
33
Item 10. Directors, Executive Officers and
Corporate Governance
Item 11. Executive Compensation
78
86
Item 12. Security Ownership of Certain Beneficial
107
Owners and Management and Related
Unitholder Matters
Item 13. Certain Relationships and Related
Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
108
109
PART II
PART IV
Item 5. Market For Registrant’s Common Equity,
34
Item 15. Exhibits, Financial Statement Schedules
111
Item 16. Form 10-K Summary
114
Related Unitholder Matters and Issuer
Purchases of Equity Securities
Item 6.
[Reserved]
Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of
Operations
Item 7A. Quantitative and Qualitative Disclosures
Item 8.
Item 9.
About Market Risk
Financial Statements and Supplementary
Data
Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections
35
35
51
52
77
77
77
77
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The following are definitions of certain terms used in this Annual Report on Form 10-K.
GLOSSARY OF SELECTED TERMS
Ammonia — Ammonia is a direct application fertilizer and is primarily used as a building block for other nitrogen products
for industrial applications and finished fertilizer products.
Capacity — Capacity is defined as the throughput a process unit is capable of sustaining, either on a calendar or operating
day basis. The throughput may be expressed in terms of maximum sustainable, nameplate or economic capacity. The maximum
sustainable or nameplate capacities may not be the most economical. The economic capacity is the throughput that generally
provides the greatest economic benefit based on considerations such as feedstock costs, product values, regulatory compliance
costs and downstream unit constraints.
Corn belt — The primary corn producing region of the United States, which Green Markets defines as Illinois, Indiana,
Iowa, Missouri, Nebraska, and Ohio.
Ethanol — A clear, colorless, flammable oxygenated hydrocarbon. Ethanol is typically produced chemically from ethylene,
or biologically from fermentation of various sugars from carbohydrates found in agricultural crops and cellulosic residues from
crops or wood. It is used in the United States as a gasoline octane enhancer and oxygenate.
MMBtu — One million British thermal units, or Btu: a measure of energy. One Btu of heat is required to raise the
temperature of one pound of water one degree Fahrenheit.
MSCF — One thousand standard cubic feet, a customary gas measurement.
Petroleum coke (pet coke) — A coal-like substance that is produced during the oil refining process.
Product pricing at gate — Product pricing at gate represents net sales less freight revenue divided by product sales volume
in tons. Product pricing at gate is also referred to as netback.
Southern Plains — The southern portion of the Great Plains, which Green Markets defines as Colorado, Kansas, New
Mexico, Oklahoma, and Texas.
Spot market — A market in which commodities are bought and sold for cash and delivered immediately.
Turnaround — A periodically performed standard procedure to inspect, refurbish, repair, and maintain the plant assets.
This process involves the shutdown and inspection of major processing units and generally occurs every three years. A
turnaround will typically extend the operating life of a facility and return performance to desired operating levels.
UAN — An aqueous solution of urea and ammonium nitrate used as a fertilizer.
Utilization — Measurement of the annual production of UAN and ammonia expressed as a percentage of the facilities’
nameplate production capacity.
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Important Information Regarding Forward-Looking Statements
This Annual Report on Form 10-K for the year ended December 31, 2023 (this “Report”) contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), including, but not limited to, those under Item 1. Business, Item 1A. Risk
Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. These forward-looking
statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements other than
statements of historical fact, including without limitation, statements regarding future operations, financial position, estimated
revenues and losses, growth, capital projects, unit repurchases, impacts of legal proceedings, projected costs, prospects, plans, and
objectives of management are forward-looking statements. The words “could”, “believe”, “anticipate”, “intend”, “estimate”, “expect”,
“may”, “continue”, “predict”, “potential”, “project”, and similar terms and phrases are intended to identify forward-looking
statements.
Although we believe our assumptions concerning future events are reasonable, a number of risks, uncertainties and other factors
could cause actual results and trends to differ materially from those projected or forward-looking. Forward-looking statements, as well
as certain risks, contingencies, or uncertainties that may impact our forward-looking statements, include, but are not limited to, the
following:
•
our ability to generate distributable cash or make cash distributions on our common units, including reserves and future uses
of cash;
the ability of our general partner to modify or revoke our distribution policy at any time;
the volatile, cyclical, and seasonal nature of our business and the variable nature of our distributions;
the effects of changes in market conditions; market volatility; fertilizer, natural gas, and other commodity prices; inflation,
and the impact of such changes on our operating results and financial condition;
the impact of weather on our business, including our ability to produce, market, sell, transport or deliver fertilizer products
profitably or at all, and on commodity supply and/or pricing;
the dependence of our operations on a few third-party suppliers, including providers of feedstocks, transportation services,
and equipment;
our reliance on, or our ability to procure economically or at all, pet coke we purchase from subsidiaries of CVR Energy, Inc.
(together with its subsidiaries, but excluding the Partnership and its subsidiaries, “CVR Energy”) and other third-party
suppliers;
our reliance on the natural gas, electricity, oxygen, nitrogen, sulfur processing, compressed dry air and other products that we
purchase from third parties;
the supply, availability, and prices of essential raw materials and the effects of inflation thereupon;
our production levels, including the risk of a material decline in those levels, and/or our ability to upgrade ammonia to UAN;
product pricing, including spot and contracted sales, the timing thereof, and our ability to realize market prices, in full or at
all;
accidents or other unscheduled shutdowns or interruptions affecting our facilities, machinery, people, or equipment, or those
of our suppliers or customers;
potential operating hazards from accidents, fire, severe weather, tornadoes, floods or other natural disasters;
operational upsets or changes in laws that could impact our ability to qualify for, the amount of, and/or the receipt of credits
(if any) under Section 45Q of the Internal Revenue Code of 1986, as amended;
our ability to meet certain carbon oxide capture and sequestration milestones;
our ability to obtain, retain, or renew permits, licenses (including technology licenses) and authorizations to operate our
business;
competition in the nitrogen fertilizer business and foreign wheat and coarse grain production, including impacts thereof as a
result of farm planting acreage, domestic and global supply and demand, and domestic or international duties, tariffs, or other
factors;
changes in our credit profile and the effects of higher interest rates and/or restrictions in our current or future debt
agreements;
existing and future laws, rulings and regulations, including but not limited to those relating to the environment, climate
change, and/or the transportation or production of hazardous chemicals, materials, or substances, like ammonia, including
potential liabilities or capital requirements arising from such laws, rulings, or regulations;
erosion of demand for our products due to increasing focus on climate change and environmental, social and governance
(“ESG”) initiatives or other factors;
ESG including but not limited to compliance with ESG-related recommendations or directives and risks or impacts relating
thereto, whether from regulators, rating agencies, lenders, investors, litigants, customers, vendors, the public or others;
alternative energy or fuel sources and impacts on corn prices (ethanol), and the end-use and application of fertilizers;
risks of terrorism, cybersecurity attacks, the security of chemical manufacturing facilities and other matters beyond our
control;
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political disturbances, geopolitical conflicts, instability and tensions, and associated changes in global trade policies and
economic sanctions, including, but not limited to, in connection with Russia’s invasion of Ukraine in February 2022 and the
conflict between Israel and Hamas, and any ongoing or potential global or regional conflicts;
our lack of asset diversification;
our dependence on significant customers and the creditworthiness and performance by counterparties;
our potential loss of transportation cost advantage over our competitors;
risks associated with third party operation of or control over important facilities necessary for operation of our nitrogen
fertilizer facilities;
the volatile nature of ammonia, potential liability for accidents involving ammonia including damage or injury to persons,
property, the environment or human health and increased costs related to the transport or production of ammonia;
our potential inability to successfully implement our business strategies, including the completion of significant capital
programs or projects;
our reliance on CVR Energy’s management team and conflicts of interest they may face operating each of CVR Partners and
CVR Energy;
control of our general partner by CVR Energy and control of CVR Energy by its controlling shareholder;
the potential inability to successfully implement our business strategies at all or on time and within our anticipated budgets,
including significant capital programs or projects and turnarounds at our fertilizer facilities and the costs thereof;
asset useful lives and impairments and impacts thereof;
realizable inventory value;
the number of investors willing to hold or acquire our common units;
our ability to issue securities or obtain financing at favorable rates or at all;
bank failures or other events affecting financial institutions;
changes in tax and other law, regulations and policies;
impact of potential runoff of water containing nitrogen based fertilizer into waterways and regulatory or legal actions in
response thereto;
changes in our treatment as a partnership for U.S. federal income or state tax purposes;
rulings, judgments or settlements in litigation, tax or other legal or regulatory matters;
instability and volatility in the capital, credit and commodities markets and in the global economy, including due to the
ongoing Russia-Ukraine war;
competition, transactions, and/or conflicts with CVR Energy and its affiliates, including CVR Energy’s controlling
shareholder;
the cost and value of payouts under our equity and non-equity incentive plans;
the cost and/or availability of insurance and our ability to recover under our insurance policies for damages or losses in full
or at all; and
labor supply shortages, labor difficulties, labor disputes, or strikes and the impact thereof on our business, operations or
financial results.
All forward-looking statements included in this Report are based on information available to us on the date of this Report. Except
as required by law, we undertake no obligation to revise or update any forward-looking statements as a result of new information,
future events or otherwise.
Information About Us
Investors should note that we make available, free of charge on our website at www.CVRPartners.com, our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). We
also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent
news releases. We may use the Investor Relations section of our website to communicate with investors. It is possible that the financial
and other information posted there could be deemed to be material information. Documents and information on our website are not
incorporated by reference herein.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information
regarding issuers, including us, that file electronically with the SEC.
December 31, 2023 | 4
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Risk Factor Summary
This summary of risks below is intended to provide an overview of the risks we face and should not be considered a substitute
for the more fulsome risk factors discussed in this Annual Report on Form 10-K.
Risks Related to Our Business
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The cyclical and highly volatile nature of our business and nitrogen fertilizer and feedstock prices.
The market for natural gas has been volatile, and fluctuations in natural gas prices could affect our competitive
position.
Nitrogen fertilizer products and our business face intense competition.
The dynamic pricing environment for nitrogen fertilizer products, as well as any changes to government policy
regarding fertilizer pricing in response thereto.
Our business is geographically concentrated and subject to regional economic downturns and seasonal variations for us
or our customers.
The loss of several significant customers may have a material adverse impact on our business.
Any decline in U.S. agricultural production or limitations on the use of nitrogen fertilizer for agricultural purposes.
Compliance with and changes in environmental laws and regulations could adversely affect our business.
Any previous or future pandemic, and actions taken in response thereto, could materially adversely affect our business.
• We are subject to cybersecurity risks and may experience cyber incidents resulting in disruption or harm to our
business.
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Changes in privacy, cybersecurity and data protection laws could result in harm to our business.
An increase in inflation could have adverse effects on our results of operations.
Risks Related to Our Plant Operations
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Failure by CVR Energy’s Coffeyville refinery or other third parties to continue to supply us with pet coke.
Any interruption in the supply of natural gas to our East Dubuque Facility.
If licensed technology were no longer available or able to be licensed economically or at all, our business may be
adversely affected.
Our operations are dependent on third-party suppliers, which could have a material adverse effect on our business.
• We rely on third-parties for transportation services and equipment.
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Any liability for accidents involving ammonia or other products we produce or transport that cause severe damage to
property or injury to the environment and human health could have a material adverse effect on our business.
• We could incur significant costs in cleaning up contamination.
• We may be unable to obtain or renew permits or approvals necessary for our operations.
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Acts of terror or sabotage, threats of war, armed conflict or war may have an adverse impact on our business.
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Adverse weather conditions or other unforeseen developments could damage our facilities or logistics assets and
impact our ability to produce and deliver our nitrogen fertilizer products.
Our facilities face significant risks due to physical damage hazards, environmental liability risk exposure, and
unplanned or emergency partial or total plant shutdowns which could cause property damage and a material decline in
production which are not fully insured.
A failure to comply with laws and regulations regarding employee and process safety.
Our business may suffer due to a skilled labor shortage or the departure of any of our key employees.
A portion of our workforce is unionized, and we are subject to the risk of labor disputes, slowdowns or strikes, which
may disrupt our business and increase our costs.
Risks Related to Our Capital Structure
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Instability and volatility in the capital, credit, and commodity markets in the global economy.
Our level of indebtedness may affect our ability to operate our business.
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•
Covenants in our debt agreements could limit our ability to incur additional indebtedness and engage in certain
transactions, as well as limit operational flexibility.
• We may not be able to generate sufficient cash to service all of our indebtedness.
• Mr. Carl C. Icahn’s controlling ownership of CVR Energy, and his interests or those of CVR Energy may conflict with
our interests.
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An increase in interest rates will cause our debt service obligations to increase.
Risks Related to Our Limited Partnership Structure
• We may not have sufficient “available cash” to pay any quarterly distribution on common units, or the board of
directors of the Partnership’s general partner (the “Board”) may elect to take reserves or distribute less than all of our
available cash.
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Our partnership agreement has limited our general partner’s liability, replaces default fiduciary duties, and restricts the
remedies available to common unitholders for actions that, without these limitations and reductions, might otherwise
constitute breaches of fiduciary duty.
Our general partner’s interests may conflict with the interests of our public common unitholders.
• We qualify for and rely upon certain exemptions from many of the NYSE’s corporate governance requirements.
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Our public common unitholders have limited voting rights and are not entitled to elect our general partner or our
general partner’s directors and do not have sufficient voting power to remove our general partner without CVR
Energy’s consent.
Common unitholders may have liability to repay distributions.
Tax Risks Related to Common Unitholders
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If the Internal Revenue Service (“IRS”) were to treat us as a corporation for U.S. federal income tax purposes or we
become subject to entity-level taxation for state tax purposes.
If the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any
applicable penalties and interest) resulting from such audit adjustments directly from us.
Our unitholders are required to pay income taxes on their share of our taxable income even if they do not receive any
cash distributions from us.
Common unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
Non-U.S. common unitholders will be subject to U.S. taxes and withholding with respect to their income and gain
from owning our common units.
Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax
consequences.
The IRS may challenge our treatment of each purchaser of our common units as having the same tax benefits without
regard to the common units actually purchased, which could adversely affect the value of our common units.
Our proration methods may be challenged by the IRS.
IRS challenge of certain valuation methodologies we have adopted to determine a unitholder’s allocations of income,
gain, loss, and deduction, could adversely affect the value of our common units.
Our common unitholders will likely be subject to state and local taxes, as well as income tax return filing
requirements, in jurisdictions where they do not live as a result of investing in our common units.
General Risks Related to the Partnership
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The acquisition and expansion strategy of our business involves significant risks.
Internally generated cash flows and other sources of liquidity may not be adequate for our capital needs.
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Part I should be read in conjunction with “Management’s Discussion and Analysis” in Part II, Item 7, and our consolidated
financial statements and related notes thereto in Part II, Item 8 of this Report.
PART I
Item 1. Business
Overview
CVR Partners, LP (“CVR Partners” or the “Partnership”) is a Delaware limited partnership formed in 2011 by CVR
Energy, Inc. (together with its subsidiaries, but excluding the Partnership and its subsidiaries, “CVR Energy”) to own, operate
and grow its nitrogen fertilizer business. The Partnership produces nitrogen fertilizer products at two manufacturing facilities,
one located in Coffeyville, Kansas operated by our wholly owned subsidiary, Coffeyville Resources Nitrogen Fertilizers, LLC
(“CRNF”) (the “Coffeyville Facility”) and one located in East Dubuque, Illinois operated by our wholly owned subsidiary, East
Dubuque Nitrogen Fertilizers, LLC (“EDNF”) (the “East Dubuque Facility”). Both facilities manufacture ammonia and are able
to further upgrade such ammonia to other nitrogen fertilizer products, principally urea ammonium nitrate (“UAN”). Nitrogen
fertilizer is used by farmers to improve the yield and quality of their crops, primarily corn and wheat. The Partnership’s
products are sold on a wholesale basis in the United States of America. As used in these financial statements, references to CVR
Partners, the Partnership, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Partners or one or both of the
facilities, as the context may require.
Organizational Structure and Related Ownership
The following chart illustrates the organizational structure of the Partnership as of December 31, 2023.
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Facilities
Coffeyville Facility - We own and operate a nitrogen fertilizer production facility in Coffeyville, Kansas that includes a
gasifier complex having a capacity of 89 million standard cubic feet per day of hydrogen, a 1,300 ton per day capacity ammonia
unit and a 3,100 ton per day capacity UAN unit. The Coffeyville Facility is the only nitrogen fertilizer plant in North America
that utilizes a pet coke gasification process to produce nitrogen fertilizer. The Coffeyville Facility’s largest raw material cost
used in the production of ammonia is pet coke, which is purchased from CVR Energy and third parties. For the years ended
December 31, 2023, 2022, and 2021, the Partnership purchased approximately $40.5 million, $22.5 million, and $23.0 million,
respectively, of pet coke, which equaled an average cost per ton of $78.14, $52.88, and $44.69, respectively. For the years
ended December 31, 2023, 2022, and 2021, we upgraded approximately 92%, 94%, and 87%, respectively, of our ammonia
production into UAN, a product that generated greater profit per ton than ammonia. When the economics are favorable, we
expect to continue upgrading substantially all of our ammonia production into UAN.
East Dubuque Facility - We own and operate a nitrogen fertilizer production facility in East Dubuque, Illinois that includes
a 1,075 ton per day capacity ammonia unit and a 950 ton per day capacity UAN unit. The East Dubuque Facility has the
flexibility to vary its product mix, thereby enabling it to upgrade a portion of its ammonia production into varying amounts of
UAN, nitric acid, and liquid and granulated urea, depending on market demand, pricing, and storage availability. The East
Dubuque Facility’s largest raw material cost used in the production of ammonia is natural gas, which is purchased from third
parties. For the years ended December 31, 2023, 2022, and 2021, the East Dubuque Facility incurred approximately $29.0
million, $46.0 million, and $31.8 million for feedstock natural gas used in production, respectively, which equaled an average
cost of $3.42, $6.66, and $3.95 per MMBtu, respectively.
Commodities
The nitrogen products we produce are globally traded commodities and are subject to price competition. The customers for
our products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on customer
service and product quality. The selling prices of our products fluctuate in response to global market conditions, feedstock
costs, and changes in supply and demand.
Agriculture
Nutrients are depleted in soil over time and, therefore, must be replenished through fertilizer application. Nitrogen is the
most quickly depleted nutrient and must be replenished every year, whereas phosphate and potassium can be retained in soil for
up to three years. Plants require nitrogen in the largest amounts, and it accounts for approximately 56% of primary fertilizer
consumption on a nutrient ton basis, per the International Fertilizer Association (“IFA”).
The three primary forms of nitrogen fertilizer used in the United States are ammonia, urea, and UAN. Unlike ammonia and
urea, UAN can be applied throughout the growing season and can be applied in tandem with pesticides and herbicides,
providing farmers with flexibility and cost savings. As a result of these factors, UAN typically commands a premium price to
urea and ammonia, on a nitrogen equivalent basis.
Demand
Global demand for fertilizers is driven primarily by grain demand and prices, which, in turn, are driven by population
growth, farmland per capita, dietary changes in the developing world, and increased consumption of bio-fuels. According to the
IFA, from 1976 to 2021, global fertilizer demand grew 2% annually. Global fertilizer use, consisting of nitrogen, phosphate,
and potash, is projected to increase by 2% through 2024 to meet global food demand according to a study funded by the Food
and Agricultural Organization of the United Nations. Currently, the developed world uses fertilizer more intensively than the
developing world, but sustained economic growth in emerging markets is increasing food demand and fertilizer use. In addition,
populations in developing countries are shifting to more protein-rich diets as their incomes increase, with such consumption
requiring more grain for animal feed. As an example, China’s wheat and coarse grains production is estimated to have increased
42% between 2011 and 2023, but still failed to keep pace with increases in demand, prompting China to grow its wheat and
coarse grain imports by more than 1,167% over the same period, according to the United States Department of Agriculture
(“USDA”).
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The United States is the world’s largest exporter of coarse grains, accounting for 25% of world exports and 27% of world
production for the fiscal year ended December 31, 2023, according to the USDA. A substantial amount of nitrogen is consumed
in production of these crops to increase yield. Based on Fertecon Limited’s (“Fertecon”) 2023 estimates, the United States is the
world’s third largest consumer and importer of nitrogen fertilizer. Fertecon is an agency which provides market information and
analysis on fertilizers and fertilizer raw materials for fertilizer and related industries, as well as international agencies. Fertecon
estimates indicate that the United States represented 11% of total global nitrogen fertilizer consumption for 2023, with China
and India as the top consumers representing 23% and 18% of total global nitrogen fertilizer consumption, respectively.
North American nitrogen fertilizer producers predominantly use natural gas as their primary feedstock. Over the last five
years, U.S. oil and natural gas reserves have increased significantly due to, among other factors, advances in extracting shale oil
and gas, as well as improvements in drilling efficiencies and reduced production costs. As a result, North America has been a
low-cost region for nitrogen fertilizer production.
Raw Material Supply
Coffeyville Facility - During the past five years, approximately 41% of the Coffeyville Facility’s pet coke requirements, on
average, were supplied by CVR Energy’s adjacent Coffeyville, Kansas refinery pursuant to a supply agreement between one of
our subsidiaries and a subsidiary of CVR Energy (the “Coffeyville MSA”). In 2023, 2022, and 2021, our supply of pet coke
from the Coffeyville refinery was approximately 43%, 47%, and 43%, respectively. Historically, our Coffeyville Facility has
obtained the remainder of its pet coke requirements through third-party contracts typically priced at a discount to the spot
market. We have contracts with several vendors to supply third-party pet coke, which could be delivered by truck, railcar, or
barge.
Additionally, our Coffeyville Facility relies on a third-party air separation plant at its location that provides contract
volumes of oxygen, nitrogen, and compressed dry air to the Coffeyville Facility gasifiers. Should the oxygen volume fall below
a specified level, the on-site vendor is contractually obligated to provide excess oxygen through its own mechanism or through
third-party purchases. The reliability of the air separation plant can have a significant impact on our Coffeyville Facility’s
operations.
East Dubuque Facility - Our East Dubuque Facility is generally able to purchase natural gas at competitive prices due to its
connection to the Northern Natural Gas interstate pipeline system, which is within one mile of the facility, and a third-party
owned and operated pipeline. The pipelines are connected to a third-party distribution system at the Chicago Citygate receipt
point and at the Hampshire interconnect from which natural gas is transported to our East Dubuque Facility. As of
December 31, 2023, we had commitments to purchase approximately 0.7 million MMBtus of natural gas supply for planned use
in our East Dubuque Facility in January of 2024, at a weighted average rate per MMBtu of approximately $3.03, exclusive of
transportation costs.
Marketing and Distribution
We primarily market UAN products to agricultural customers and ammonia products to agricultural and industrial
customers. UAN and ammonia, including freight, accounted for approximately 69% and 24%, respectively, of total net sales for
the year ended December 31, 2023.
UAN and ammonia are primarily distributed by truck or railcar. If delivered by truck, products are most commonly sold on
a shipping point basis, and freight is normally arranged by the customer. We also utilize a fleet of railcars for use in product
delivery. If delivered by railcar, products are most commonly sold on a destination point basis, and we typically arrange the
freight.
The nitrogen fertilizer products leave our Coffeyville Facility either in railcars for destinations located principally on the
Union Pacific or Burlington Northern Santa Fe railroads or in trucks for direct shipment to customers. Our East Dubuque
Facility primarily sells product to customers located within 200 miles of the facility. In most instances, customers take delivery
of nitrogen products at our East Dubuque Facility and arrange to transport them to their final destinations by truck.
Additionally, our East Dubuque Facility has direct access to a barge dock on the Mississippi River, as well as a nearby rail spur
serviced by the Canadian National Railway Company, both of which are utilized occasionally to sell and distribute our
products.
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Customers
Retailers and distributors are the main customers for UAN, and, more broadly, the industrial and agricultural sectors are the
primary recipients of our ammonia products. Given the nature of our business, and consistent with industry practice, we sell our
products on a wholesale basis under a contract or by purchase order. Contracts with customers generally contain fixed pricing
and have terms of less than one year. Our top two customers represented 25% and 30% of net sales for the years ended
December 31, 2023 and 2022, respectively, and our top customer represented 13% of net sales for the year ended December 31,
2021.
Competition
Nitrogen fertilizer production is a global market with competitors in every region of the world, with barge and rail
distribution fostering healthy competition throughout the United States. The industry is dominated by price considerations,
which are driven by raw material and transportation costs, currency fluctuations, trade barriers, and regulators. Our business has
experienced, and expects to continue to experience, significant levels of competition from domestic and foreign nitrogen
fertilizer producers, many of whom have significantly greater financial and other resources. Farming activities intensify in the
United States during the spring and fall fertilizer application periods, and geographic proximity to these activities is also a
significant competitive advantage for domestic producers. We manage our manufacturing and distribution operations to best
serve our customers during these critical periods.
Subject to location and other considerations, our major domestic competitors in the nitrogen fertilizer business generally
includes CF Industries Holdings, Inc., which sells significantly more nitrogen fertilizers in the United States than other industry
participants; Nutrien Ltd.; Koch Fertilizer Company, LLC; OCI N.V.; and LSB Industries, Inc. Domestic customers generally
demonstrate sophisticated buying tendencies that include a focus on cost and service. We also encounter competition from
producers of fertilizer products manufactured in foreign countries, including the threat of increased production capacity. In
certain cases, foreign producers of fertilizer that export to the United States may be subsidized by their respective governments.
Seasonality
Because we primarily sell agricultural commodity products, our business is exposed to seasonal fluctuations in demand for
nitrogen fertilizer products in the agricultural industry. In addition, the demand for fertilizers is affected by the aggregate crop
planting decisions and fertilizer application rate decisions of individual farmers who make planting decisions based largely on
the prospective profitability of a harvest. The specific varieties and amounts of fertilizer they apply depend on factors like crop
prices, farmers’ current liquidity, soil conditions, weather patterns, and the types of crops planted. We typically experience
higher net sales in the first half of the calendar year, which is referred to as the planting season, and net sales tend to be lower
during the second half of each calendar year, which is referred to as the fill season.
Environmental Matters
Our business is subject to extensive and frequently changing federal, state, and local environmental laws and regulations
governing the emission and release of regulated substances into the environment, the transportation, storage, and disposal of
waste, the treatment and discharge of wastewater and stormwater, the storage, handling, use, and transportation of our nitrogen
fertilizer products, and the characteristics and composition of UAN and ammonia. These laws and regulations and the
enforcement thereof impact us by imposing:
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•
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restrictions on operations or the need to install enhanced or additional control and monitoring equipment;
liability for the investigation and remediation of contaminated soil and groundwater at current and former
facilities (if any) and for off-site waste disposal locations; and
specifications for the products we market, primarily UAN and ammonia.
Our operations require numerous permits, licenses, and authorizations. Failure to comply with these permits or
environmental laws, rules, and regulations could result in fines, penalties, or other sanctions or liabilities or a revocation of our
permits, licenses, or authorizations. In addition, the laws and regulations to which we are subject are often evolving and many
of them have or could become more stringent or have or could become subject to more stringent interpretation or enforcement
by federal or state agencies. These laws and regulations could result in increased capital, operating, and compliance costs.
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The Federal Clean Air Act (“CAA”)
The CAA and its implementing regulations, as well as state laws and regulations governing air emissions, affect us both
directly and indirectly. Direct impacts may occur through the CAA’s permitting requirements and/or emission control and
monitoring requirements relating to specific air pollutants, as well as the requirement to maintain a risk management program to
help prevent accidental releases of certain regulated substances. The CAA affects the Partnership by extensively regulating the
air emissions of sulfur dioxide (“SO2”), volatile organic compounds, nitrogen oxides, and other substances. Some or all of the
regulations promulgated pursuant to the CAA, or any future promulgations of regulations, may require the installation of
controls or changes to our nitrogen fertilizer facilities (collectively referred to as the “Facilities”) to maintain compliance. If
new controls or changes to operations are needed, the costs could be material.
The regulation of air emissions under the CAA requires that we obtain various construction and operating permits and
incur capital expenditures for the installation of certain air pollution control devices at our operations. Various standards and
programs specific to our operations have been implemented, such as the National Emission Standard for Hazardous Air
Pollutants, the New Source Performance Standards, and the New Source Review.
The U.S. Environmental Protection Agency (“EPA”) regulates greenhouse gas (“GHG”) emissions under the CAA. In
October 2009, the EPA finalized a rule requiring certain large emitters of GHGs to inventory and report their GHG emissions to
the EPA. In accordance with the rule, our Facilities monitor and report our GHG emissions to the EPA. In May 2010, the EPA
finalized the “Greenhouse Gas Tailoring Rule”, which established GHG emissions thresholds that determine when stationary
sources, such as the nitrogen fertilizer facilities, must obtain permits under the Prevention of Significant Deterioration (“PSD”)
and Title V programs of the CAA. Under the rule, facilities already subject to the PSD and Title V programs that increase their
emissions of GHGs by a significant amount are required to undergo PSD review and to evaluate and implement air pollution
control technology, known as “best available control technology”, to reduce GHG emissions.
On January 20, 2021, the White House issued an Executive Order titled “Protecting Public Health and the Environment and
Restoring Science to Tackle the Climate Crisis”, as well as a formal notification re-accepting entry of the United States into the
Paris Agreement. On January 27, 2021, the White House issued another climate-related Executive Order, titled “Tackling the
Climate Crisis at Home and Abroad”. On April 22, 2021, the Biden Administration announced a new target for the United
States to achieve a 50 to 52 percent reduction from 2005 levels in economy-wide net GHG emissions in 2030. These orders
could negatively impact our business and lead to increased costs that could be material.
The EPA’s approach to regulating GHG emissions, as well as executive orders, may change, including under future
administrations, which may have impacts on our Facilities.
Recent Greenhouse Gas Footprint Reduction Efforts
In October 2020, the Partnership announced that it generated its first carbon offset credits from voluntary nitrous oxide
abatement at its Coffeyville Facility. The Partnership has similar nitrous oxide abatement efforts at its East Dubuque Facility. In
2021, according to the EPA, nitrous oxide accounted for approximately 6% of carbon dioxide-equivalent (“CO2e”) emissions in
the United States.
The Partnership previously entered into a Joint Development Agreement with ClimeCo, a developer of emission-reduction
projects for nitric acid plants, to jointly design, install and operate a tertiary abatement system at one of its nitric acid plants in
Coffeyville. The system was designed to abate 94% of all N2O in the unit while preventing the release of approximately
450,000 metric tons of carbon dioxide equivalent on an annualized basis. From 2018 to 2022, the N2O abatement systems at the
East Dubuque Facility’s two nitric acid plants have abated, on average, the annual release of approximately 256,000 metric tons
of CO2e.
CVR Partners’ N2O abatement projects are registered with the Climate Action Reserve (the “Reserve”), a carbon offset
registry for the North American market. The Reserve employs high-quality standards and an independent third-party
verification process to issue its carbon credits, known as Climate Reserve Tonnes.
The Partnership also sequesters carbon dioxide that is not utilized for urea production at its Coffeyville Facility by
capturing and purifying the CO2 as part of its manufacturing process and then transfers it to CapturePoint LLC, an unaffiliated
third-party (“CapturePoint”), which then compresses and ships the CO2 for sequestration through Enhanced Oil Recovery
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(“EOR”) under an EPA-approved monitoring, reporting, and verification plan. We believe that certain carbon oxide capture and
sequestration activities conducted at or in connection with the Coffeyville Facility qualify under the Internal Revenue Service
(“IRS”) safe harbor described in Revenue Procedure 2020-12 for certain tax credits available to joint ventures under Section
45Q of the Internal Revenue Code of 1986, as amended (“Section 45Q Credits”). In January 2023, we entered into a series of
agreements with CapturePoint and certain unaffiliated third-party investors intended to qualify under the IRS safe harbor
described in Revenue Procedure 2020-12 for certain joint ventures that are eligible to claim Section 45Q Credits and allow us to
monetize Section 45Q Credits we expect to generate from January 6, 2023 until March 31, 2030.
Combining our nitrous oxide abatement and CO2 sequestration activities should reduce our CO2e footprint by an average of
over 1 million metric tons per year. In addition, our Coffeyville Facility is uniquely qualified to produce hydrogen and
ammonia that could be certified ‘blue’ to a market that is increasingly demanding reduced carbon footprints. These greenhouse
gas footprint reduction efforts support our core Values of Environment and Continuous Improvement and our goal of
continuing to produce nitrogen fertilizers that produce crops that help to feed the world’s growing population in the most
environmentally responsible way possible.
The Federal Clean Water Act (“CWA”)
The CWA and its implementing regulations, as well as state laws and regulations that govern the discharge of pollutants
into the water, affect the Partnership. The CWA’s permitting requirements establish discharge limitations that may be based on
technology standards, water quality standards, and restrictions on the total maximum daily load of pollutants allowed to enter a
particular water body based on its use. In addition, water resources are becoming more scarce. The Coffeyville Facility has
contracts in place to receive water during certain water shortage conditions, but these conditions and contracts could change
over time depending on the scarcity of water.
In January 2021, the U. S. Environmental Protection Agency (the “EPA”) announced it is undertaking a plan to review and
update effluent standards for many industries. EPA is prioritizing those sectors that are ranked high in point source categories
for total nitrogen discharges, including fertilizer manufacturers. The EPA’s review eventually could result in different
regulations governing the Partnership.
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and the Emergency Planning
and Community Right-to-Know Act (“EPCRA”)
The release of hazardous substances or extremely hazardous substances into the environment is subject to release reporting
requirements under federal and state environmental laws. Our Facilities also periodically experience releases of hazardous and
extremely hazardous substances from their equipment. From time to time, the EPA has conducted inspections and issued
information requests to us with respect to our compliance with reporting requirements under the CERCLA and the EPCRA. If
we fail to timely or properly report a release, or if a release violates the law or our permits, we could become the subject of a
governmental enforcement action or third-party claims. Government enforcement or third-party claims relating to releases of
hazardous or extremely hazardous substances could result in significant expenditures and liability.
Environmental Remediation
As is the case with all companies engaged in similar industries, we face potential exposure from claims and lawsuits
involving environmental matters, including soil and water contamination and personal injury or property damage allegedly
caused by hazardous substances that we manufactured, handled, used, stored, transported, spilled, disposed of, or released. The
Coffeyville Facility has entered into an agreement with the Kansas Department of Health and Environment (“KDHE”) to
address certain historical releases of UAN located on our property and comingled with legacy groundwater contamination from
the adjacent Coffeyville refinery operated by a subsidiary of CVR Energy (the “Coffeyville Refinery”). The cleanup provisions
of our agreement with KDHE are held in abeyance so long as the Coffeyville Refinery conducts corrective action for these
comingled historical releases in accordance with its Resource Conservation and Recovery Act (“RCRA”) Permit. There is no
assurance that the Coffeyville Refinery will comply with its Permit conditions in the future, which may trigger enforcement of
the cleanup provisions of our agreement with KDHE. There is no assurance that we will not become involved in future
proceedings related to the release of hazardous or extremely hazardous substances for which we have potential liability or that,
if we were held responsible for damages in any existing or future proceedings, such costs would be covered by insurance or
would not be material.
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Environmental Insurance
We are covered by CVR Energy’s site pollution legal liability insurance policies, which include business interruption
coverage, subject to applicable retentions and exclusions. The policies insure any location owned, leased, rented, or operated by
the Partnership, including our Facilities. The policies insure certain pollution conditions at, or migrating from, a covered
location, certain waste transportation and disposal activities, and business interruption.
In addition to the site pollution legal liability insurance policies, we maintain umbrella and excess casualty insurance
policies which include sudden and accidental pollution coverage policies maintained by CVR Energy, subject to applicable
retentions and exclusions. This insurance generally provides coverage due to named perils for claims involving pollutants
where the discharge is sudden and accidental and first commences at a specific day and time during the policy period.
The site pollution legal liability policy and the pollution coverage provided in the casualty insurance policies are subject to
retentions and deductibles and contain discovery requirements, reporting requirements, exclusions, definitions, conditions, and
limitations that could apply to a particular pollution claim, and there can be no assurance such claim will be adequately insured
for all potential damages.
Health, Safety, and Security Matters
We are subject to a number of federal and state laws and regulations related to safety, including the Occupational Safety
and Health Act, which created the Occupational Safety and Health Administration (“OSHA”) and comparable state statutes, the
purposes of which are to protect the health and safety of workers. We are also subject to OSHA Process Safety Management
regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable,
or explosive chemicals. We are committed to safe, reliable operations of our facilities to protect the health and safety of our
employees, our contractors, and the communities in which we operate. Our health and safety management system provides a
comprehensive approach to injury, illness and incident prevention, risk assessment and mitigation, and emergency management.
Despite our efforts to achieve excellence in our health and safety performance, there can be no assurances that there will not be
accidents resulting in losses, injuries, or fatalities that could materially adversely impact our business. We periodically audit our
programs and seek to continually improve our management systems.
Our Facilities were subject to the Chemical Facility Anti-Terrorism Standards (“CFATS”), a regulatory program designed
to ensure facilities have security measures in place to reduce the risk that certain hazardous chemicals are weaponized by
terrorists. In June 2023, authorization for CFATS was allowed to expire, but it’s possible that Congress will reauthorize
CFATS. Despite the expiration for CFATS, our Facilities continue to comply with its requirements. In addition, the East
Dubuque Facility is regulated under the Maritime Transportation Security Act. We implement and maintain comprehensive
security programs designed to comply with regulatory requirements and protect our assets and employees.
We periodically assess risk and conduct audits of our programs and seek to continually improve our health, safety, and
security management systems.
Human Capital
Our employees are the most important part of our business and help us work to achieve our Mission to be a top-tier North
American nitrogen-based fertilizer company as measured by safe and reliable operations, superior financial performance and
profitable growth. CVR Partners’ culture is defined by our core Values: Safety, Environment, Integrity, Corporate Citizenship
and Continuous Improvement. The efforts of our employees in support of this Mission are guided each and every day by these
core Values as we strive to achieve excellence for all of our key stakeholders – employees, communities and stockholders. See
“Management’s Discussion and Analysis” in Part II, Item 7 of this Report for further discussion on our Mission and core
Values.
Workforce Profile
As of December 31, 2023, CVR Partners and its subsidiaries had 310 employees, all of which are located in the United
States. Of these, 95 employees are covered by a collective bargaining agreement.
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Safety & Health
We are committed to providing a safe and healthy workplace and striving to protect our employees, contractors and
communities. We accomplish this through compliance with applicable workplace safety and environmental laws and
regulations, seeking employee input, learning from any events, and maintaining comprehensive audit and training programs and
emergency response and disaster recovery plans. To assess our safety performance, we monitor workplace injuries, process
safety incidents, and environmental events, and perform compliance audits and risk assessments. We believe these efforts
reinforce our safety culture; promote a safe workplace, accountability, and stronger community relations; help guard against
complacency; and ultimately, enhance our safety performance and help us manage risk and reduce impact to personal health
and safety and the environment.
Compensation & Benefits
We believe that our future success largely depends upon our continued ability to attract and retain highly skilled
employees. We are committed to providing wages and benefits that are competitive with a market-based, pay-for-performance
compensation philosophy. Our performance bonus program is an important component of our compensation program,
rewarding high-performing employees for CVR Partners’ performance against pre-defined safety and health, operational
reliability, and financial measures. Senior employees may also receive long-term incentive awards that currently vest ratably
over a three-year period, subject to the terms and conditions of the applicable award agreement, aligning employee
compensation with the interests of our shareholders and promoting employee retention. We provide paid time off and paid
holidays, a 401(k) Company match program, life insurance, health savings and dependent care flexible spending accounts, and
an employee assistance program. In furtherance of our core Value of Continuous Improvement, we also offer programs for
tuition reimbursement and dependent scholarships. We offer a remote work policy to provide eligible employees with the
flexibility that is key to a work-life balance. We encourage all employees to live our core Value of corporate citizenship by
making a positive impact in our communities by taking advantage of our volunteerism policy pursuant to which eligible
employees are provided paid time off from work to volunteer at 501(c)(3) non-profit entities.
Talent Management
We believe our competitive compensation and benefit plans allow us to attract and retain talented employees. Our
recruiting strategy focuses on ensuring our hiring practices are free from bias for or against any individual or group of
candidates. We continue to build upon our inclusive culture by expanding our recruitment efforts to include veteran recruitment
and apprenticeship programs, recruiting interns at diverse colleges, and promoting diverse representation within our workforce.
In support of the personal development of our employees and our goal of employing and retaining effective and dynamic
leaders, we provide in-person supervisor training to managers at all levels, which focuses on a combination of business and
leadership strategies, including coaching and performance management, goal setting, critical thinking, effective communication
and listening, development and succession planning, delegation techniques, and legal aspects of leadership, among other topics.
Diversity & Inclusion
We are an equal opportunity employer and strive to maintain a diverse and inclusive work environment free from
harassment and discrimination regardless of race, religion, color, age, gender, disability, minority, sexual orientation or any
other protected class. Our recruiting efforts that include focus on veteran and diverse college populations, support our diverse
and inclusive environment, as do the activities of our Diversity & Inclusion Committee. We provide diversity and inclusion
training that includes focus on unconscious bias where employees learn to recognize and address the effects thereof by
encouraging diversity of experience and opinion. Our Code of Ethics and Business Conduct and our anti-discrimination and
harassment policies also help us maintain a work environment where individuals are treated with respect and dignity, and where
diversity of thought and perspective is valued.
Available Information
Our website address is www.CVRPartners.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, are available free of charge through our website under “Investor Relations”, as soon as
reasonably practicable after the electronic filing or furnishing of these reports is made with the Securities and Exchange
Commission (the “SEC”) at www.sec.gov. In addition, our Corporate Governance Guidelines, Codes of Ethics and Business
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Conduct, and the charters of the Audit Committee, the Compensation Committee, and the Environmental, Health and Safety
Committee of the Board of Directors of our general partner are available on our website. These guidelines, policies, and
charters are also available in print without charge to any unitholder requesting them. Information on our website is not a part of,
and is not incorporated into, this Report or any other report we may file with or furnish to the SEC, whether before or after the
date of this Report and irrespective of any general incorporation language therein.
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Item 1A. Risk Factors
The following risks should be considered together with the other information contained in this Report and all of the
information set forth in our filings with the SEC. If any of the following risks or uncertainties develops into actual events, our
business, financial condition or results of operations could be materially adversely affected. 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.
Risks Related to Our Business
Our business is, and nitrogen fertilizer and feedstock prices are, cyclical and highly volatile, which could have a material
adverse effect on our results of operations, financial condition and cash flows.
Demand for nitrogen fertilizer products is dependent on fluctuating demand for crop nutrients by the global agricultural
industry. These fluctuations historically have had and could in the future have significant effects on prices across all nitrogen
fertilizer products and, in turn, our results of operations, financial condition and cash flows. Nitrogen fertilizer products are
commodities, the price of which can be highly volatile. The prices of nitrogen fertilizer products depend on a number of factors,
including general economic conditions, cyclical trends in end-user markets, supply and demand imbalances, governmental
policies, and weather conditions, which have a greater relevance because of the seasonal nature of fertilizer application. If
seasonal demand exceeds the projections on which we base our production levels, customers may acquire nitrogen fertilizer
products from competitors, and our profitability may be negatively impacted. If seasonal demand is less than expected, we may
be left with excess inventory that will have to be stored or liquidated. The international market for nitrogen fertilizers is
influenced by such factors as the relative value of the U.S. dollar and its impact upon the cost of importing nitrogen fertilizers,
foreign agricultural policies, the existence of, or changes in, import or foreign currency exchange barriers in certain foreign
markets, changes in the hard currency demands of certain countries and other regulatory policies of foreign governments, as
well as the laws and policies of the U.S. affecting foreign trade and investment. Supply is affected by available capacity and
operating rates, raw material costs, government policies and global trade. A decrease in nitrogen fertilizer prices would have a
material adverse effect on our business, cash flow and ability to make distributions.
Nitrogen fertilizer products and our business face intense competition.
Our business is subject to intense price competition from both U.S. and foreign sources. With little or no product
differentiation, customers make their purchasing decisions principally on the basis of delivered price and availability of the
product. Increased global supply or decreases in transportation costs for foreign sources of fertilizer may put downward
pressure on fertilizer prices. We compete with a number of U.S. producers and producers in other countries, including state-
owned and government-subsidized entities that may have greater total resources and are less dependent on earnings from
fertilizer sales, which make them less vulnerable to industry downturns and better positioned to pursue new expansion and
development opportunities. In addition, imports of fertilizer from other countries may be unfairly subsidized, as determined by
the U.S. Department of Commerce on June 24, 2022 with respect to UAN imports from Russia and Trinidad and Tobago. On
July 18, 2022, the U.S. International Trade Commission ultimately voted against imposing import tariffs on UAN from Russia
and Trinidad and Tobago and, accordingly, the U.S. Department of Commerce will not issue countervailing duty orders and
anti-dumping duty orders on UAN imports from the same countries. An inability to compete successfully could result in a loss
of customers, which could adversely affect our sales, profitability, and cash flows and, therefore, have a material adverse effect
on our results of operations and financial condition.
The dynamic pricing environment for nitrogen fertilizer products, as well as any changes to government policy regarding
fertilizer pricing in response thereto, could negatively affect our results of operations.
In light of the recent strong pricing environment, farmers may shift preference to other types of fertilizer products or shift
crop rotation to minimize purchases of nitrogen fertilizer, both of which would negatively affect our sales volumes and revenue.
Recent calls for governmental action related to fertilizer pricing conditions, including related to an investigation of market
manipulation and proposals to limit price increases or place a maximum price ceiling or cap on fertilizer product pricing, would
add complexity to the already dynamic global market for nitrogen fertilizer, and if such initiatives were adopted, our product
sales, business and results of operations may be negatively impacted.
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Our business is geographically concentrated and is therefore subject to regional economic downturns and seasonal
variations for us or our customers, which may affect our production levels, transportation costs and inventory and working
capital levels.
Our sales to agricultural customers are concentrated in the Great Plains and Midwest states, and nitrogen fertilizer demand
is seasonal. Our quarterly results may vary significantly from one year to the next due to weather-related shifts in planting
schedules and purchase patterns. Because we build inventory during low demand periods, the accumulation of inventory to be
available for seasonal sales creates significant seasonal working capital and storage capacity requirements. The degree of
seasonality can change significantly from year-to-year due to conditions in the agricultural industry and other factors. As a
consequence of this seasonality, distributions of available cash, if any, may be volatile and may vary quarterly and annually.
Our sales volumes depend on significant customers, and the loss of several significant customers may have a material
adverse impact on our results of operations, financial condition and cash flows.
We have a significant concentration of customers. Our two largest customers represented approximately 25% of net sales
for the year ended December 31, 2023. Given the nature of our business, and consistent with industry practice, we do not have
long-term minimum purchase contracts with our customers. The loss of several of these significant customers, or a significant
reduction in purchase volume by several of them, could have a material adverse effect on our results of operations, financial
condition and cash flows.
Any decline in U.S. agricultural production or limitations on the use of nitrogen fertilizer for agricultural purposes could
have a material adverse effect on the sales of nitrogen fertilizer, and on our results of operations, financial condition and
cash flows.
Conditions in the U.S. agricultural industry significantly impact our operating results. The U.S. agricultural industry can be
affected by a number of factors, including weather patterns and field conditions, current and projected grain inventories and
prices, domestic and international population changes, demand for U.S. agricultural products, U.S., state and foreign policies
regarding trade in agricultural products, and changes in governmental regulations and incentives for corn-based ethanol
production that could affect future ethanol demand and production.
State and federal governmental policies, including farm and biofuel subsidies and commodity support programs, as well as
the prices of fertilizer products, may also directly or indirectly influence the number of acres planted, the mix of crops planted
and the use of fertilizers for particular agricultural applications. Developments in crop technology could also reduce the use of
chemical fertilizers and adversely affect the demand for nitrogen fertilizer. Unfavorable state and federal governmental policies
could negatively affect nitrogen fertilizer prices and therefore have a material adverse effect on our results of operations,
financial condition and cash flows.
Compliance with and changes in environmental laws and regulations, including those related to climate change, could
result in increased operating costs and capital expenditures and adversely affect our performance.
Our operations are subject to extensive federal, state and local environmental laws and regulations relating to the protection
of the environment, including those governing the emission or discharge of pollutants into the environment, product use and
specifications and the generation, treatment, storage, transportation, disposal and remediation of solid and hazardous wastes.
Violations of applicable environmental laws and regulations, or of the conditions of permits issued thereunder, can result in
substantial penalties, injunctive orders compelling installation of additional controls, civil and criminal sanctions, operating
restrictions, injunctive relief, permit revocations and/or facility shutdowns, which may have a material adverse effect on our
ability to operate our facilities and accordingly our financial performance.
In addition, new environmental laws and regulations, new interpretations of existing laws and regulations, or increased
governmental enforcement of laws and regulations could require us to make additional unforeseen expenditures. It is unclear
the impact the Biden Administration will have on the laws and regulations applicable to us, however, measures to address
climate change and reduce GHG emissions (including carbon dioxide, methane and nitrous oxides) are in various phases of
discussion or implementation and could affect our operations by requiring increased operating and capital costs and/or
increasing taxes on GHG emissions. On January 26, 2024, EPA issued a proposed rule to implement the methane emissions
reduction program. Public comments on the proposal are due March 11, 2024. If we are unable to maintain sales of our products
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at a price that reflects such increased costs or have to increase the prices of our products because of such increased costs, there
could be a material adverse effect on our business, financial condition, results of operations and cash flows.
End user demand for our products may also be adversely impacted by climate change legislation and other changes to or
new interpretations of environmental laws, due to increased costs or application restrictions. Decreased demand for our
products may have a material adverse effect on our results of operations, financial condition and cash flows.
Public health crises such as the COVID-19 pandemic have had, and may continue to have, adverse impacts on our
business, financial condition, results of operations and liquidity.
The economic effects from public health crises such as the COVID-19 pandemic on our business were and may again be
significant. Although our business has recovered since the onset of the pandemic in March 2020, there continues to be
uncertainty and unpredictability about the lingering impacts to the worldwide economy that could negatively affect our
business, financial condition, results of operations, and liquidity in future periods. The extent to which the pandemic and its
ongoing effects may adversely impact our future business, financial, and operating results, and for what duration and
magnitude, depends on factors that are continuing to evolve, are difficult to predict and, in many instances, are beyond our
control. The ultimate outcome of these and other factors may result in many adverse consequences including, but not limited to,
disruption or delays to supply chains for critical equipment or feedstock, inflation, increased interest rates, and increased
administrative, compliance, and operational costs. In addition, future public health crises could also result in significant
economic disruption and other effects that adversely impact our business, financial condition, results of operations and liquidity
in future periods in ways similar to the COVID-19 pandemic and its effects. The adverse impacts of the COVID-19 pandemic
had, and may continue to have, the effect of precipitating or heightening many of the other risks described in this section.
We are subject to cybersecurity risks and may experience cyber incidents resulting in disruption or harm to our business.
We depend on internal, related-party, and third-party information technology systems to manage and support our
operations, and we collect, process, and retain sensitive and confidential customer information in the normal course of business.
To protect our facilities and systems against and mitigate cyber risk, we have implemented several programs, including
externally performed cyber risk monitoring, audits and penetration testing and an information security training program, and we
completed the implementation of applicable Cybersecurity and Infrastructure Security Agency security standard guidelines in
2023. On an as needed basis, but no less than quarterly, we brief the Audit Committee of the board of directors of the
Partnership’s general partner “(Board”) on information security matters. Despite these measures (or those we may implement in
the future), our facilities and these systems could be vulnerable to security breaches, computer viruses, lost or misplaced data,
programming errors, human errors, acts of vandalism, or other events. Moreover, cyberattacks are expected to accelerate on a
global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and
tools (including artificial intelligence) that circumvent controls, evade detection and even remove forensic evidence of the
infiltration. A breach could also originate from or compromise our customers’, vendors’, suppliers’, or other third-party
networks outside of our control that could impact our business and operations, and there can be no assurance that the systems of
third parties have been designed to prevent or limit the effects of cyber incidents or attacks, will be sufficient to prevent or
detect material consequences arising from such incidents or attacks, or to avoid a material adverse impact. Although we
implement controls on third-party connectivity to our systems, we have limited control in ensuring their systems consistently
enforce strong cybersecurity controls. Any disruption of these systems or security breach or event resulting in the
misappropriation, loss or other unauthorized disclosure of confidential information, whether by us directly or our third-party
service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business, or
otherwise affect our results of operations.
Our business is subject to complex and evolving laws, regulations and security standards regarding privacy, cybersecurity
and data protection (“data protection laws”). Many of these data protection laws are subject to change and uncertain
interpretation, and could result in claims, increased costs of operations, or other harm to our business.
The constantly evolving regulatory and legislative environment surrounding data privacy and protection poses increasingly
complex compliance challenges, and complying with such data protection laws could increase the costs and complexity of
compliance. While we do not collect significant amounts of personal information from consumers, we do have personal
information from our employees, job applicants and some third parties, such as contractors and distributors. Any failure,
whether real or perceived, by us to comply with applicable data protection laws could result in proceedings or actions against us
by governmental entities or others, subject us to significant fines, penalties, judgments, and negative publicity, require us to
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change our business practices, increase the costs and complexity of compliance, and adversely affect our business. Our
compliance with emerging privacy/security laws, as well as any associated inquiries or investigations or any other government
actions related to these laws, may increase our operating costs.
An increase in inflation could have adverse effects on our results of operations.
Inflation in the United States increased beginning in the second half of 2021 and continued into the beginning of 2023, due
to a substantial increase in money supply, a stimulative fiscal policy, a significant rebound in consumer demand as COVID-19
restrictions were relaxed, the Russia-Ukraine war and worldwide supply chain disruptions resulting from the economic
contraction caused by COVID-19 and lockdowns followed by a rapid recovery. According to the Consumer Price Index,
inflation rose from 5.4% in June 2021 to 7.0% in December 2021 to 8.2% in September 2022. As of December 2022 and
December 2023, inflation was at 6.5% and 3.4%, respectively. An increase in inflation rates could negatively affect our
profitability and cash flows, due to higher wages, higher operating costs, higher financing costs and/or higher supplier prices.
We may be unable to pass along such higher costs to our customers. In addition, inflation may adversely affect our customers’
financing costs, cash flows and profitability, which could adversely impact their operations and our ability to offer credit and
collect receivables.
Risks Related to Our Plant Operations
Failure by CVR Energy’s Coffeyville refinery or other third parties to continue to supply us with pet coke could negatively
impact our results of operations.
Unlike our competitors, whose primary costs are related to the purchase of natural gas and whose costs are therefore largely
variable, our Coffeyville Facility uses a pet coke gasification process to produce nitrogen fertilizer. Our profitability is directly
affected by the price and availability of pet coke obtained from CVR Energy’s Coffeyville refinery pursuant to a long-term
agreement. Our Coffeyville Facility has historically obtained a majority of its pet coke from CVR Energy’s Coffeyville refinery
over the past five years, although this percentage has decreased to 43% in 2023. However, should CVR Energy’s Coffeyville
refinery fail to perform in accordance with the existing agreement or to the extent pet coke from CVR Energy’s Coffeyville
refinery is insufficient, we would need to purchase pet coke from third parties on the open market, which could negatively
impact our results of operations to the extent third-party pet coke is unavailable or available only at higher prices. Currently, we
purchase 100% of the pet coke CVR Energy’s Coffeyville refinery produces. However, we are still required to procure
additional pet coke from third parties to maintain our production rates. We are currently party to pet coke supply agreements
with multiple third-party refineries to provide a significant amount of pet coke at fixed prices. The terms of these agreements
currently end in December 2024.
Any interruption in the supply of natural gas to our East Dubuque Facility could have a material adverse effect on our
results of operations and financial condition.
Our East Dubuque Facility depends on the availability of natural gas. We have two agreements for pipeline transportation
of natural gas with expiration dates in 2025. We typically purchase natural gas from third parties on a spot basis and, from time
to time, may enter into fixed-price forward purchase contracts. Upon expiration of the agreements, we may be unable to extend
the service under the terms of the existing agreements or renew the agreements on satisfactory terms, or at all, necessitating
construction of a new connection that could be costly and disruptive. Any disruption in the supply of natural gas to our East
Dubuque Facility could restrict our ability to continue to make products at the facility and have a material adverse effect on our
results of operations and financial condition.
If licensed technology were no longer available or able to be licensed economically or at all, our business may be
adversely affected.
We have licensed a combination of patent, trade secret, and other intellectual property rights of third parties for use in our
plant operations. If our use of technology on which our operations rely were to be terminated or face infringement claims,
licenses to alternative technology may not be available, or may only be available on terms that are not commercially reasonable
or acceptable, or in the case of infringement, may result in substantial costs, all of which could have a material adverse effect on
our results of operations, financial condition and cash flows.
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In addition, we may identify in the future additional third-party intellectual property that we believe is necessary to our
operations. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several companies
may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary,
with the result that such intellectual property may not be available on economic terms or at all. In addition, companies that
perceive us to be a competitor may be unwilling to assign or license rights to us. Even if such licenses are available, we may be
required to pay the licensor substantial royalties based on sales of our products, and such licenses may be non-exclusive, which
could give our competitors access to the same intellectual property licensed to us. Any of the foregoing could have a material
adverse effect on our competitive position, results of operations, financial condition and cash flows.
Our operations are dependent on third-party suppliers, which could have a material adverse effect on our results of
operations, financial condition and cash flows.
Operations of our Coffeyville Facility depend in large part on the performance of third-party suppliers, including the
adjacent third-party air separation plant under a contract through 2039 and a third-party electric service provider under a
contract through June 30, 2029. Our East Dubuque Facility operations also depend in large part on the performance of third-
party suppliers, including for the purchase of electricity, which we purchase under a utility service agreement that terminates on
June 1, 2025 and will continue thereafter unless either party provides 30 days advance written notice of termination. Should
these, or any of our other third-party suppliers fail to perform in accordance with existing contractual arrangements, or should
we otherwise lose the service of any third-party suppliers, our operations (or a portion thereof) could be forced to shutdown or
suspend operations. Alternative sources of supply could be difficult to obtain. Any shutdown of our operations (or a portion
thereof), even for a limited period, could have a material adverse effect on our results of operations, financial condition and
ability to make cash distributions.
We rely on third-party providers of transportation services and equipment, which subjects us to risks and uncertainties
beyond our control and that may have a material adverse effect on our results of operations, financial condition and ability
to make distributions.
Our business also relies on third-party railroad, trucking, and barge companies to ship finished products to customers.
These transportation services are subject to various hazards, including extreme weather conditions, work stoppages, delays,
spills, derailments and other accidents, and other operating hazards. Further, the limited number of towing companies and
barges available for ammonia transport may also impact the availability of transportation for our products. These transportation
operations, equipment and services are also subject to environmental, safety and other regulatory oversight. Due to concerns
related to terrorism or accidents, local, state and federal governments could implement new regulations affecting the
transportation of our finished products. In addition, new regulations could be implemented affecting the equipment used to ship
our finished products. Any delay in our ability to ship our finished products as a result of these transportation companies’
failure to operate properly, the implementation of new and more stringent regulatory requirements affecting transportation
operations or equipment, or significant increases in the cost of these services or equipment could have a material adverse effect
on our results of operations, financial condition and ability to make cash distributions.
Any liability for accidents involving ammonia or other products we produce or transport that cause severe damage to
property or injury to the environment and human health could have a material adverse effect on our results of operations,
financial condition and ability to make cash distributions.
Our business manufactures, processes, stores, handles, distributes and transports ammonia, which can be very volatile and
extremely hazardous. Major accidents or releases involving ammonia could cause severe damage or injury to property, the
environment and human health, as well as a possible disruption of supplies and markets. Such an event could result in civil
lawsuits, fines, penalties and regulatory enforcement proceedings, all of which could lead to significant liabilities. Any damage
or injury to persons, equipment, or property or other disruption of our ability to produce or distribute products could result in a
significant decrease in operating revenues and significant additional costs to replace or repair and insure our assets, which could
have a material adverse effect on our results of operations, financial condition and ability to make cash distributions. Our
facilities periodically experience minor releases of ammonia related to leaks from our facilities’ equipment. Similar events may
occur in the future.
In addition, we may incur significant losses or increased costs relating to the operation of railcars used for the purpose of
carrying various products, including ammonia. Due to the dangerous and potentially hazardous nature of the cargo we carry, in
particular ammonia, a railcar accident may result in fires, explosions, and releases of material which could lead to sudden,
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severe damage or injury to property, the environment, and human health. In the event of contamination, under environmental
law, we may be held responsible even if we are not at fault, and we complied with the laws and regulations in effect at the time
of the accident. Litigation arising from accidents involving ammonia and other products we produce or transport may result in
us being named as a defendant in lawsuits asserting claims for substantial damages, which could have a material adverse effect
on our results of operations, financial condition and ability to make cash distributions.
We could incur significant costs in cleaning up contamination.
We handle hazardous substances which may result in spills, discharges or other releases of hazardous substances into the
environment. Past or future spills related to or migrating from any of our current or former operations and solid or hazardous
waste disposal, may give rise to liability (including for personal injury, property damage, penalties, strict liability, and potential
cleanup responsibility) to governmental entities or private parties under federal, state or local environmental laws, as well as
under common law. For example, we could be held strictly liable under CERCLA, and similar state statutes, for past or future
spills without regard to fault or whether our actions were in compliance with the law at the time of the spills, including in
connection with contamination associated with our current and former facilities, and facilities to which we transported or
arranged for the transportation of wastes or byproducts containing hazardous substances for treatment, storage, or disposal.
Such liability could have a material adverse effect on our results of operations, financial condition and cash flows and may not
be covered by insurance.
The Coffeyville Facility has entered into an agreement with the Kansas Department of Health and Environment (“KDHE”)
to address certain historical releases of UAN located on our property and comingled with legacy groundwater contamination
from CVR Energy’s adjacent Coffeyville refinery. The cleanup provisions of our agreement with KDHE are held in abeyance
so long as the Coffeyville refinery conducts corrective action for these comingled historical releases in accordance with its
RCRA Permit. There is no assurance that the Coffeyville refinery will comply with its Permit conditions in the future, which
may trigger enforcement of the cleanup provisions of our agreement with KDHE.
We may be unable to obtain or renew permits or approvals necessary for our operations, which could inhibit our ability to
do business.
Our business holds numerous environmental and other governmental permits and approvals authorizing operations at our
facilities and future expansion of our operations is predicated upon the ability to secure approvals therefore. A decision by a
government agency to deny or delay issuing a new or renewed material permit or approval, or to revoke or substantially modify
an existing permit or approval, could have a material adverse effect on our ability to continue operations and on our financial
condition, results of operations and cash flows.
Acts of terror or sabotage, threats of war, armed conflict, or war may have an adverse impact on our business, our future
results of operations and our overall financial performance.
Acts of sabotage or terrorist attacks (including cyberattacks), threats of war, armed conflict, or war, as well as events
occurring in response to or in connection with such events may harm our business or have an adverse impact on our future
results of operations and financial condition. For example, the conflict between Israel and Hamas, which began in October
2023, and the ongoing Russia-Ukraine war, pose significant geopolitical risks to global fertilizer and agriculture markets.
Critical infrastructure such as chemical manufacturing facilities may be at greater risk of terrorist attacks than other
businesses in the United States. As a result, the chemical industry is subject to security regulations relating to physical and
cyber security. The costs of compliance therewith may have a material adverse effect on our financial condition. Further,
uncertainty surrounding new or continued global hostilities or other sustained military campaigns, sanctions brought by the U.S.
and other countries, and the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an act of
terror, armed conflict or war may affect our operations in unpredictable ways, including disruptions of chemical supplies and
markets for fertilizer products. The long-term impacts of terrorist attacks and the threat of future terrorist attacks on the
chemical industry in general, and on us in particular, are unknown. Increased security measures taken by us as a precaution
against possible terrorist attacks or vandalism could result in increased costs to our business. In addition, disruption or
significant increases in chemical prices could result in government-imposed price controls.
Further, changes in the insurance markets attributable to terrorist attacks, acts of sabotage or cyberattacks could make
certain types of insurance more difficult for us to obtain. Moreover, the insurance that may be available to us may be
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significantly more expensive than our existing insurance coverage. Instability in the financial markets as a result of war,
terrorism, sabotage or cyberattack could also affect our ability to raise capital, including our ability to repay or refinance debt.
Adverse weather conditions or other unforeseen developments could damage our facilities or logistics assets and impair
our ability to produce and deliver our nitrogen fertilizer products.
The regions in which our facilities are located and in which our customers operate are susceptible to severe storms,
including hurricanes, thunderstorms, tornadoes, floods, extended periods of rain, ice storms and snow, some of which we or our
customers have experienced in recent years. Such inclement weather conditions or other unforeseen developments could
damage our facilities or logistics assets. If such weather conditions prevail near our facilities or logistics assets, they could
interrupt or undermine our ability to produce and transport products or to manage our business.
If events such as storms, including hurricanes, thunderstorms, tornadoes, floods, extended periods of rain, ice storms and
snow become more frequent, they could have an adverse effect on our operations, as well as the operations of our suppliers and
customers. Regional occurrences, such as energy shortages or increases in commodity prices, geological hazards and natural
disasters, could also have a material adverse effect on our business, financial condition and results of operations. The physical
effects of adverse weather conditions have the potential to directly affect our operations and result in increased costs related to
our operations. Since climate change may change weather patterns and the severity of weather events, any such changes could
consequently materially adversely affect our revenues and cash flows and the demand for our products by our customers.
However, because the nature and timing of changes in extreme weather events (such as increased frequency, duration, and
severity) are uncertain, it is not possible for us to estimate reliably the future financial risk to our operations caused by these
potential physical risks.
Our facilities face significant risks due to physical damage hazards, environmental liability risk exposure, and unplanned
or emergency partial or total plant shutdowns which could cause property damage and a material decline in production
which are not fully insured.
If any of our plants, logistics assets, or key suppliers sustain a catastrophic loss and operations are shutdown or
significantly impaired, it would have a material adverse impact on our operations, financial condition and cash flows.
Operations at our plant could be curtailed, limited or completely shut down for an extended period of time as the result of one
or more unforeseen events and circumstances, which may not be within our control, including: major unplanned maintenance
requirements; catastrophic events caused by mechanical breakdown, electrical injury, pressure vessel rupture, explosion,
contamination, fire, or natural disasters, including floods, windstorms, and other similar events; labor supply shortages or labor
difficulties that result in a work stoppage or slowdown; cessation or suspension of a plant or specific operations dictated by
environmental authorities; acts of terrorism, cyberattacks or other deliberate malicious acts; and an event or incident involving a
large clean-up, decontamination, or the imposition of laws and ordinances regulating the cost and schedule of demolition or
reconstruction, which can cause significant delays in restoring property to its pre-event condition.
We are insured under casualty, environmental, property and business interruption insurance policies. The property and
business interruption policies insure our real and personal property. These policies are subject to limits, sub-limits, retention
(financial and time-based), and deductibles. The application of these and other policy conditions could materially impact
insurance recoveries and potentially cause us to assume losses which could impair earnings. There is potential for a common
occurrence to impact both our Coffeyville Facility and CVR Energy’s Coffeyville refinery in which case the insurance limits
and applicable sub-limits would apply to all damages combined.
There is finite capacity in the commercial insurance industry engaged in underwriting chemical industry risk, and factors
impacting cost and availability include: (i) losses in our industries, (ii) natural disasters, (iii) specific losses incurred by us, and
(iv) inadequate investment returns earned by the insurance industry. In the future, certain insurance could become unavailable
or available only for reduced amounts of coverage or at exorbitant costs. If the supply of commercial insurance is curtailed, we
may not be able to continue our present limits of insurance coverage or obtain sufficient insurance capacity to adequately insure
our risks or we may determine that premium costs, in our judgement, do not justify such expenditures and instead increase our
self-insurance.
We are subject to strict laws and regulations regarding employee and process safety, and failure to comply with these laws
and regulations could have a material adverse effect on our results of operations, financial condition and profitability.
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We are subject to the requirements of OSHA and comparable state statutes that regulate the protection of the health and
safety of workers, the proper design, operation, and maintenance of our equipment, and require us to provide information about
hazardous materials used in our operations. Failure to comply with these requirements may result in significant fines or
compliance costs, which could have a material adverse effect on our results of operations, financial condition and cash flows.
Our business may suffer due to the departure of any of our key senior executives or other key employees. Furthermore, a
shortage of skilled labor may make it difficult for us to maintain labor productivity.
Our future performance depends to a significant degree upon our management team and key technical personnel. The loss
or unavailability to us of any member of our management team or a key technical employee could significantly harm us. We
face competition for these professionals from our competitors, our customers and other companies operating in our industry. To
the extent that the services of members of our management team and key technical personnel would be unavailable to us for any
reason, we may be required to hire other personnel to manage and operate our business. We may not be able to locate or employ
such qualified personnel on acceptable terms, or at all.
Furthermore, our operations require skilled and experienced laborers with proficiency in multiple tasks. A shortage of
trained workers due to retirements or otherwise could have an adverse impact on productivity and costs and our ability to
expand production in the event there is an increase in the demand for our products and services, which could adversely affect
our operations.
A portion of our workforce is unionized, and we are subject to the risk of labor disputes, slowdowns or strikes, which may
disrupt our business and increase our costs.
As of December 31, 2023, approximately 31% of our employees were represented by labor unions under collective
bargaining agreements. We may not be able to renegotiate our collective bargaining agreements when they expire on
satisfactory terms or at all. A failure to do so may increase our costs. For example, a labor union representing approximately 90
employees at our East Dubuque Facility went on strike in October 2023, after its collective bargaining agreement expired.
While our East Dubuque Facility has been operating during the strike, in the event that the strike continues for a long duration,
our operations could be negatively affected. See Part II, Item 7, “Partnership Overview—Other Events” for more information.
In addition, our existing labor agreements may not prevent a strike or work stoppage at any of our facilities in the future, and
any work stoppage could negatively affect our results of operations, financial condition and cash flows.
In addition, there continues to be a tight labor market. Increases in remote work opportunities have also amplified the
competition for employees and contractors. An inability to recruit, train, and retain adequate personnel, or the loss or departure
of personnel with key skills or deep institutional knowledge for whom we are unable to find adequate replacements, may
negatively impact our business. Inflation has also caused and may in the future cause increases in employee-related costs, both
due to higher wages and other compensation.
Risks Related to Our Capital Structure
Instability and volatility in the capital, credit, and commodity markets in the global economy could negatively impact our
business, financial condition, results of operations and cash flows.
Our business, financial condition, and results of operations could be negatively impacted by difficult conditions and
volatility in the capital, credit, and commodities markets and in the global economy. For example: there can be no assurance
that funds under our credit facilities will be available or sufficient, and in such a case, we may not be able to successfully obtain
additional financing on favorable terms, or at all; market volatility could exert downward pressure on our common units, which
may make it more difficult for us to raise additional capital and thereby limit our ability to grow, which could in turn cause our
unit price to drop; or customers experiencing financial difficulties may fail to meet their financial obligations when due because
of bankruptcy, lack of liquidity, operational failure or other reasons could result in decreased sales and earnings for us.
Our level of indebtedness may affect our ability to operate our business and may have a material adverse effect on our
financial condition and results of operations.
We have incurred significant indebtedness, and we may be able to incur significant additional indebtedness in the future. If
new indebtedness is added to our current indebtedness, the risks described below could increase. Our level of indebtedness
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could have important consequences, such as: (i) limiting our ability to obtain additional financing to fund our working capital
needs, capital expenditures, debt service requirements, acquisitions, or other purposes; (ii) requiring us to utilize a significant
portion of our cash flows to service our indebtedness, thereby reducing available cash and our ability to make distributions on
our common units; (iii) limiting our ability to use operating cash flow in other areas of the business because we must dedicate a
substantial portion of additional funds to service debt; (iv) limiting our ability to compete with other companies who are not as
highly leveraged, as we may be less capable of responding to adverse economic and industry conditions; (v) limiting our ability
to make certain payments on debt that is subordinated or secured on a junior basis; (vi) restricting the way in which we conduct
business because of financial and operating covenants, including regarding borrowing additional funds, disposing of assets, and
the ability of subsidiaries to pay dividends or make other distributions; (vii) limiting our ability to enter into certain transactions
with our affiliates; (viii) limiting our ability to designate our subsidiaries as unrestricted subsidiaries; (ix) exposing us to
potential events of default (if not cured or waived) under financial and operating covenants contained in our or our respective
subsidiaries’ debt instruments; and (x) limiting our ability to react to changing market conditions.
Covenants in our debt agreements could limit our ability to incur additional indebtedness and engage in certain
transactions, as well as limit operational flexibility, which could adversely affect our liquidity and ability to pursue our
business strategies.
Our debt facilities and instruments contain, and any instruments governing future indebtedness would likely contain, a
number of covenants that impose significant operating and financial restrictions on us and our subsidiaries and may limit our
ability to engage in acts that may be in our long-term best interest, including restrictions on the ability, among other things, to:
incur, assume, or guarantee additional indebtedness or issue redeemable or preferred stock; pay dividends or distributions in
respect of equity securities or make other restricted payments; prepay, redeem, or repurchase certain debt; enter into agreements
that restrict distributions from restricted subsidiaries; make certain payments on debt that is subordinated or secured on a junior
basis; make certain investments; sell or otherwise dispose of assets, including capital stock of subsidiaries; create liens on
certain assets; consolidate, merge, sell, or otherwise dispose of all or substantially all assets; enter into certain transactions with
affiliates; and designate subsidiaries as unrestricted subsidiaries.
Any of these restrictions could limit our ability to plan for or react to market conditions and could otherwise restrict
operating activities. Any failure to comply with these covenants could result in a default under existing debt facilities and
instruments. Upon a default, unless waived, the lenders under such debt facilities and instruments would have all remedies
available to a secured lender and could elect to terminate their commitments, cease making further loans, institute foreclosure
proceedings against assets, and force bankruptcy or liquidation, subject to any applicable intercreditor agreements. In addition,
a default under existing debt facilities and instruments could trigger a cross default under other agreements and could trigger a
cross default under the agreements governing future indebtedness. Our operating segments’ results may not be sufficient to
service existing indebtedness or to fund other expenditures, and we may not be able to obtain financing to meet these
requirements.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions
to satisfy our debt obligations that may not be successful.
Our ability to satisfy debt obligations will depend upon, among other things, our future financial and operating
performance, which will be affected by prevailing economic conditions and financial, business, regulatory, and other factors,
many of which are beyond our control; future ability to borrow under our ABL Credit Facility, the availability of which
depends on, among other things, complying with the covenants in the facility; and our future ability to obtain other financing.
We cannot offer any assurance that our business will generate sufficient cash flow from operations or that we will be able to
draw funds under our ABL Credit Facility or from other sources of financing, in an amount sufficient to fund our liquidity
needs. If cash flows and capital resources are insufficient to service our indebtedness, we could face substantial liquidity
problems and may be forced to reduce or delay capital expenditures, sell assets, seek additional capital, restructure or refinance
indebtedness, or seek bankruptcy protection. These alternative measures may not be successful and may not permit us to meet
scheduled debt service and other obligations. Our ability to restructure or refinance debt will depend on the condition of the
capital markets and our financial condition at such time. Any refinancing of debt could be at higher interest rates and may
require us to comply with more onerous covenants, which could further restrict business operations, and the terms of existing or
future debt agreements may restrict us from adopting some of these alternatives.
Further, our ABL Credit Facility bears interest at variable rates and other debt we incur could likewise be variable-rate
debt. If market interest rates increase, variable-rate debt will create higher debt service requirements, which could adversely
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affect our ability to fund our liquidity needs, capital investments, and distributions to our unitholders. We may enter into
agreements limiting our exposure to higher interest rates, but any such agreements may not offer complete protection from this
risk.
Mr. Carl C. Icahn exerts significant influence over the Partnership through his controlling ownership of CVR Energy,
and his interests or those of CVR Energy may conflict with the interests of the Partnership and our unitholders.
Mr. Carl C. Icahn indirectly controls approximately 66% of the voting power of CVR Energy’s common stock and, by
virtue of such ownership, is able to control the Partnership through CVR Energy’s ownership of our general partner and its sole
member, including: the election and appointment of directors; business strategy and policies; mergers or other business
combinations; acquisition or disposition of assets; future issuances of common stock, common units, or other securities;
incurrence of debt or obtaining other sources of financing; and the payment of distributions on our common units. The existence
of a controlling stockholder may have the effect of making it difficult for, or may discourage or delay, a third-party from
seeking to acquire a majority of our common units, which may adversely affect the market price of such common units.
Further, Mr. Icahn’s interests may not always be consistent with the Partnership’s interests or with the interests of our
common unitholders. Mr. Icahn and entities controlled by him may also pursue acquisitions or business opportunities in
industries in which we compete, and there is no requirement that any additional business opportunities be presented to us. We
also have and may in the future enter into transactions to purchase goods or services with affiliates of Mr. Icahn. To the extent
that conflicts of interest may arise between us and Mr. Icahn and his affiliates, those conflicts may be resolved in a manner
adverse to us and our common unitholders.
In addition, in the event of a sale or transfer of some or all of Mr. Icahn’s interests in CVR Energy to an unrelated party or
group, a change of control could be deemed to have occurred under the terms of the indenture governing our 6.125% Senior
Secured Notes, due 2028 which could require us to offer to repurchase all outstanding notes at 101% of their principal amount
plus accrued interest to the date of repurchase, and an event of default could be deemed to have occurred under our ABL Credit
Facility, which could allow lenders to accelerate indebtedness owed to them. If such an event were to occur, it is possible that
we will not have sufficient funds at the time of the change of control to make the required repurchase of notes or repay amounts
outstanding under our ABL Credit Facility, if any.
An increase in interest rates will cause our debt service obligations to increase.
Since March 2022, the Federal Reserve has raised its target range for the federal funds rate by 525 basis points through
January 31, 2024. An increase in the interest rates associated with our floating rate debt would increase our debt service costs
and affect our results of operations and cash flow available for payments of our debt obligations. In addition, an increase in
interest rates could adversely affect our future ability to obtain financing or materially increase the cost of any additional
financing.
Risks Related to Our Limited Partnership Structure
We may not have sufficient “available cash” to pay any quarterly distribution on common units, or the board of directors
of the Partnership’s general partner (the “Board”) may elect to take reserves or distribute less than all of our available cash.
The current policy of the Board is to distribute an amount equal to the available cash generated by our business each
quarter to our common unitholders. As a result of its cash distribution policy, we will likely need to rely primarily upon external
financing sources, including commercial bank borrowings and the issuance of debt and equity securities, to fund acquisitions
and expansion capital expenditures, and our growth, if any, may not be as robust as that of businesses that reinvest available
cash to expand ongoing operations. We may not have sufficient available cash each quarter to enable the payment of
distributions to common unitholders. Furthermore, the partnership agreement does not require us to pay distributions on a
quarterly basis or otherwise. As such, the Board may modify or revoke its cash distribution policy at any time at its discretion,
including in such a manner that would result in an elimination of cash distributions regardless of the amount of available cash
our business generates.
To the extent we issue additional units in connection with any acquisitions or expansion capital expenditures or as in-kind
distributions, current unitholders would experience dilution and the payment of distributions on those additional units may
decrease the amount we distribute in respect of its outstanding units. Under our partnership agreement, we are authorized to
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issue an unlimited number of additional interests without a vote of the common unitholders. The issuance by us of additional
common units or other equity interests of equal or senior rank would reduce the proportionate ownership interest of common
unitholders immediately prior to the issuance. As a result of the issuance of common units, the following may occur: the
amount of cash distributions on each common unit may decrease; the ratio of our taxable income to distributions may increase;
the relative voting strength of each previously outstanding common unit will be diminished; and the market price of the
common units may decline. In addition, our partnership agreement does not prohibit the issuance by our subsidiaries of equity
interests, which may effectively rank senior to the common units. The incurrence of additional commercial borrowings or other
debt to finance its growth strategy would result in increased interest expense, which, in turn, would reduce the available cash we
have to distribute to unitholders.
Our partnership agreement has limited our general partner’s liability, replaces default fiduciary duties, and restricts the
remedies available to common unitholders for actions that, without these limitations and reductions, might otherwise
constitute breaches of fiduciary duty.
As permitted under Delaware law, our partnership agreement, which applies to and binds common unitholders, limits the
liability and replaces the fiduciary duties of our general partner, while also restricting the remedies available to our common
unitholders for actions that, without these limitations and reductions, might constitute breaches of fiduciary duty. Our
partnership agreement contains provisions that replace the standards to which our general partner would otherwise be held by
state fiduciary duty law. For example: our partnership agreement (i) permits our general partner to make a number of decisions
in its individual capacity, as opposed to its capacity as general partner, which entitles our general partner to consider only the
interests and factors that it desires and means that it has no duty or obligation to give any consideration to any interest of, or
factors affecting, any limited partner; (ii) provides that our general partner will not have any liability to unitholders for
decisions made in its capacity as general partner so long as it acted in good faith, meaning it believed the decision was in our
best interest; (iii) provides that our general partner and the officers and directors of its general partner will not be liable for
monetary damages to common unitholders, including us, for any acts or omissions unless there has been a final and non-
appealable judgment entered by a court of competent jurisdiction determining that the general partner or its officers or directors
acted in bad faith or engaged in fraud or willful misconduct, or in the case of a criminal matter, acted with knowledge that the
conduct was criminal; (iv) generally provides that affiliated transactions and resolutions of conflicts of interest not approved by
the conflicts committee of the board of directors of its general partner and not involving a vote of unitholders must be on terms
no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and
reasonable” to us, as determined by its general partner in good faith, and that, in determining whether a transaction or resolution
is “fair and reasonable”, the general partner may consider the totality of the relationships between the parties involved,
including other transactions that may be particularly advantageous or beneficial to affiliated parties, including us; and (v)
provides that in resolving conflicts of interest, it will be presumed that in making its decision, the general partner or its conflicts
committee acted in good faith, and in any proceeding brought by or on behalf of any holder of common units, the person
bringing or prosecuting such proceeding will have the burden of overcoming such presumption.
Our general partner, an indirect wholly-owned subsidiary of CVR Energy, has fiduciary duties to CVR Energy and its
stockholders, and the interests of CVR Energy and its stockholders may differ significantly from, or conflict with, the
interests of our public common unitholders.
Our general partner is responsible for managing us. Although our general partner has fiduciary duties to manage us in a
manner that is in our best interests, the fiduciary duties are specifically limited by the express terms of our partnership
agreement, and the directors and officers of our general partner also have fiduciary duties to manage our general partner in a
manner beneficial to CVR Energy and its stockholders. The interests of CVR Energy and its stockholders may conflict with the
interests of our public common unitholders. In resolving these conflicts, our general partner may favor its own interests, the
interests of CVR Services, its sole member, or the interests of CVR Energy and holders of CVR Energy’s common stock,
including its majority stockholder, an affiliate of Icahn Enterprises L.P., over our interests and those of our common
unitholders.
The potential conflicts of interest include, among others, the following: (i) neither our partnership agreement nor any other
agreement requires the owners of our general partner, including CVR Energy, to pursue a business strategy that favors us and
the affiliates of our general partner, including CVR Energy, have fiduciary duties to make decisions in their own best interests
and in the best interest of holders of CVR Energy’s common stock, which may be contrary to our interests (ii) our general
partner is allowed to take into account the interests of parties other than us or our common unitholders, such as its owners or
CVR Energy, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to our common unitholders;
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(iii) our general partner has limited its liability and reduced its fiduciary duties under our partnership agreement and has also
restricted the remedies available to our common unitholders for actions that, without the limitations, might constitute breaches
of fiduciary duty; (iv) the Board determines the amount and timing of asset purchases and sales, capital expenditures,
borrowings, repayment of indebtedness, and issuances of additional partnership interests, each of which can affect the amount
of cash that is available for distribution to our common unitholders; (v) our partnership agreement does not restrict our general
partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual
arrangements with any of these entities on our behalf and there is no limitation on the amounts that can be paid; (vi) our general
partner controls the enforcement of obligations owed to us by it and its affiliates, and decides whether to retain separate counsel
or others to perform services for us; (vii) our general partner determines which costs incurred by it and its affiliates are
reimbursable by us; and (viii) certain of the executive officers of our general partner also serve as executive officers of CVR
Energy, including our executive chairman, who will face conflicts of interest when making decisions which may benefit either
us or CVR Energy. Additionally, the compensation of such executive officers is set by CVR Energy, and we have no control
over the amount paid to such officers.
CVR Energy has the power to elect all of the members of the Board. Our general partner has control over all decisions
related to our operations. Our public common unitholders do not have an ability to influence any operating decisions and will
not be able to prevent us from entering into any transactions. Certain subsidiaries of CVR Energy perform certain corporate
services for us, including finance, accounting, legal, information technology, auditing, and cash management activities, and we
could be impacted by any failure of those entities to adequately perform these services.
If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have
the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the
common units held by public common unitholders at a price not less than their then-current market price, as calculated pursuant
to the terms of our partnership agreement. As a result, each holder of our common units may be required to sell such holder’s
common units at an undesirable time or price and may not receive any return on investment, and may also incur a tax liability
upon a sale of its common units. Our general partner is not obligated to obtain a fairness opinion regarding the value of the
common units to be repurchased by it upon exercise of the call right. There is no restriction in our partnership agreement that
prevents our general partner from issuing additional common units and then exercising its call right. Our general partner may
use its own discretion, free of fiduciary duty restrictions, in determining whether to exercise this right.
Our general partner may transfer its general partner interest in us to a third-party, including in a merger or in a sale of all or
substantially all of its assets without the consent of our common unitholders. The new equity owner of our general partner
would then be in a position to replace the board of directors and the officers of our general partner with its own choices and to
influence their decisions. If control of our general partner were transferred to an unrelated third-party, the new owner would
have no interest in CVR Energy and CVR Energy could, upon 90 days’ notice, terminate the services agreement pursuant to
which it provides us with the services of its senior management team.
As a publicly traded partnership we qualify for and rely upon certain exemptions from many of the NYSE’s corporate
governance requirements.
As a publicly traded partnership, we qualify for certain exemptions from the NYSE’s corporate governance requirements,
which include the requirements that (i) a majority of the Board consist of independent directors and (ii) the Board have a
nominating/corporate governance committee and compensation committee that are composed entirely of independent directors.
Our general partner’s board of directors has not and does not currently intend to establish a nominating/corporate governance
committee and we could avail ourselves of the additional exemptions available to publicly traded partnerships at any time in the
future. Accordingly, common unitholders do not have the same protections afforded to equity holders of companies that are
subject to all of the corporate governance requirements of the NYSE.
Our public common unitholders have limited voting rights and are not entitled to elect our general partner or our general
partner’s directors and do not have sufficient voting power to remove our general partner without CVR Energy’s consent.
Unlike the holders of common stock in a corporation, our common unitholders have only limited voting rights on matters
affecting our business and, therefore, limited ability to influence management’s decisions. Our common unit holders do not
choose the Member(s) of the general partner, nor do they elect directors of the Board or participate in other matters routinely
conducted at annual meetings of stockholders, and have no practical ability to remove our general partner without the consent
of CVR Energy. As a result of these limitations, the price at which the common units will trade could be diminished. Our
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partnership agreement restricts common unitholders’ voting rights by providing that any units held by a person that owns 20%
or more of any class of units then outstanding, other than our general partner, its affiliates, their transferees, and persons who
acquired such units with the prior approval of the Board, may not vote on any matter. Our partnership agreement also contains
provisions limiting the ability of common unitholders to call meetings or to acquire information about our operations, and to
influence the manner or direction of management.
Common unitholders may have liability to repay distributions.
In the event that: (i) we make distributions to our common unitholders when our nonrecourse liabilities exceed the sum of
(a) the fair market value of our assets not subject to recourse liability and (b) the excess of the fair market value of our assets
subject to recourse liability over such liability, or a distribution causes such a result, and (ii) a common unitholder knows at the
time of the distribution of such circumstances, such common unitholder will be liable for a period of three years from the time
of the impermissible distribution to repay the distribution under Section 17-607 of the Delaware Act. Likewise, upon the
winding up of the partnership, in the event that (i) we do not distribute assets in the following order: (a) to creditors in
satisfaction of their liabilities; (b) to partners and former partners in satisfaction of liabilities for distributions owed under our
partnership agreement; (c) to partners for the return of their contribution; and finally (d) to the partners in the proportions in
which the partners share in distributions; and (ii) a common unitholder knows at the time of such circumstances, then such
common unitholder will be liable for a period of three years from the impermissible distribution to repay the distribution under
Section 17-807 of the Delaware Act.
Tax Risks Related to Common Unitholders
If the IRS were to treat us as a corporation for U.S. federal income tax purposes or we become subject to entity-level
taxation for state tax purposes, our cash available for distribution to our common unitholders would be substantially
reduced, likely causing a substantial reduction in the value of our common units.
The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a
partnership for U.S. federal income tax purposes. Despite the fact that we are organized as a limited partnership under Delaware
law, we would be treated as a corporation for U.S. federal income tax purposes unless we satisfy a “qualifying income”
requirement. Based upon our current operations, we believe we satisfy the qualifying income requirement. Although we have
received favorable private letter rulings from the IRS with respect to certain of our operations, no ruling has been or will be
requested regarding our treatment as a partnership for U.S. federal income tax purposes. Failing to meet the qualifying income
requirement or a change in current law (which could be retroactive) could cause us to be treated as a corporation for U.S.
federal income tax purposes or otherwise subject us to taxation at the corporate tax rate and distributions to our common
unitholders would generally be taxed again as corporate distributions, and no income, gains, losses, or deductions would flow
through to our common unitholders. Because a tax would be imposed upon us as a corporation, our cash available for
distribution to our common unitholders would be substantially reduced and result in a material reduction in the anticipated cash
flow and after-tax return to our common unitholders, likely causing a substantial reduction in the value of our common units. At
the state level, several states have been evaluating ways to subject partnerships to entity-level taxation through the imposition of
state income, franchise, or other forms of taxation. We currently own assets and conduct business in several states, many of
which impose a margin or franchise tax. In the future, we may expand our operations. Imposition of a similar tax on us in other
jurisdictions that we may expand could substantially reduce our cash available for distribution to our common unitholders.
If the IRS makes audit adjustments to our income tax returns, it may assess and collect any taxes (including any
applicable penalties and interest) resulting from such audit adjustments directly from us, in which case our cash available
for distribution to our common unitholders might be substantially reduced and our current and former common unitholders
may be required to indemnify us for any taxes (including any applicable penalties and interest) resulting from such audit
adjustments that were paid on such common unitholders’ behalf.
The IRS (and some states) may assess and collect from us taxes (including any applicable penalties and interest) resulting
from audit adjustments to our income tax returns. Our general partner may elect to either pay the taxes (including any
applicable penalties and interest) directly to the IRS or, if we are eligible, issue a revised information statement to each common
unitholder and former common unitholder with respect to an audited and adjusted return. There can be no assurance that such
an election to allocate the audit adjustment and tax payment obligation to our current and former common unitholders will be
practical, permissible, or effective in all circumstances. As a result, our current common unitholders may bear some or all of the
tax liability resulting from such audit adjustment, even if they did not own common units in us during the tax year under audit.
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If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties, and interest, our cash
available for distribution to our common unitholders might be substantially reduced and our current and former unitholders may
be required to indemnify us for any taxes (including any applicable penalties and interest) resulting from such audit adjustments
that were paid on such unitholders behalf.
Our unitholders are required to pay income taxes on their share of our taxable income even if they do not receive any
cash distributions from us.
A unitholder’s allocable share of our taxable income will be taxable to it, which may require the unitholder to pay U.S.
federal income taxes and, in some cases, state and local income taxes, even if the unitholder receives no cash distributions or
cash distributions from us that are less than the actual tax liability that results from that income. For example, if we sell assets
and use the proceeds to repay existing debt or fund capital expenditures, you may be allocated taxable income and gain
resulting from the sale, and our cash available for distribution would not increase. Similarly, taking advantage of opportunities
to reduce our existing debt, such as debt exchanges, debt repurchases, or modifications of our existing debt could result in
“cancellation of indebtedness income” being allocated to our common unitholders as taxable income without any increase in
our cash available for distribution.
Common unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
In general, we are entitled to a deduction for interest paid or accrued on indebtedness properly allocable to our trade or
business during our taxable year. However, our deduction for “business interest” is limited to the sum of our business interest
income and 30% of our “adjusted taxable income”. For the purposes of this limitation, our adjusted taxable income is computed
without regard to any business interest expense or business interest income. In the case of taxable years beginning on or after
January 1, 2022, our adjusted taxable income is computed by taking into account any deduction allowable for depreciation,
amortization, or depletion.
Non-U.S. common unitholders will be subject to U.S. taxes and withholding with respect to their income and gain from
owning our common units.
Non-U.S. common unitholders are generally taxed and subject to income tax filing requirements by the United States on
income effectively connected with a U.S. trade or business (“effectively connected income”). Income allocated to our common
unitholders and any gain from the sale of our common units will generally be considered to be “effectively connected” with a
U.S. trade or business. As a result, distributions to a Non-U.S. common unitholder will be subject to withholding at the highest
applicable effective tax rate, and a Non-U.S. common unitholder who sells or otherwise disposes of a common unit will also be
subject to U.S. federal income tax on the gain realized from the sale or disposition of that common unit.
In addition to the withholding tax imposed on distributions of effectively connected income, distributions to a Non-U.S.
common unitholder will also be subject to a 10% withholding tax on the amount realized with respect to any distribution. In the
case of a distribution made through a broker, the amount realized is the amount of any distribution in excess of our cumulative
net income. As we do not compute our cumulative net income for such purposes due to the complexity of the calculation and
lack of clarity in how it would apply to us, we intend to treat all of our distributions as being in excess of our cumulative net
income for such purposes and subject to such 10% withholding tax. Accordingly, distributions to a Non-U.S. common
unitholder that are made through a broker will be subject to a combined withholding tax rate equal to the sum of the highest
applicable effective tax rate and 10%.
Additionally, if a common unitholder sells or otherwise disposes of a unit, the transferee is required to withhold 10% of the
amount realized by the transferor unless the transferor certifies that it is not a foreign person, and we are required to deduct and
withhold from the transferee amounts that should have been withheld by the transferee but were not withheld. Under the
Treasury Regulations, such withholding will be required on open market transactions, but in the case of a transfer made through
a broker, a partner’s share of liabilities will be excluded from the amount realized. In addition, the obligation to withhold will
be imposed on the broker instead of the transferee (and we will generally not be required to withhold from the transferee
amounts that should have been withheld by the transferee but were not withheld). These withholding obligations will apply to
transfers of our common units occurring on or after January 1, 2023. Current and prospective Non-U.S. common unitholders
should consult their tax advisors regarding the impact of these rules on an investment in our common units.
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Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences.
Investment in our common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts,
raises unique issues. For example, virtually all of our income allocated to organizations that are exempt from U.S. federal
income tax will be unrelated business taxable income and will be taxable. Further, a tax-exempt entity with more than one
unrelated trade or business (including by attribution from investment in a partnership such as ours that is engaged in one or
more unrelated trade or business) is required to compute the unrelated business taxable income of such tax-exempt entity
separately with respect to each such trade or business (including for purposes of determining any net operating loss deduction).
As a result, it may not be possible for tax-exempt entities to utilize losses from an investment in our partnership to offset
unrelated business taxable income from another unrelated trade or business and vice versa.
The IRS may challenge our treatment of each purchaser of our common units as having the same tax benefits without
regard to the common units actually purchased, which could adversely affect the value of our common units.
Because we cannot match transferors and transferees of common units, we have adopted certain methods for allocating
depreciation and amortization deductions that may not conform to all aspects of existing Treasury Regulations. A successful
IRS challenge to the use of these methods could adversely affect the amount of tax benefits available to our common
unitholders. It also could affect the timing of these tax benefits or the amount of gain from any sale of common units and could
have a negative impact on the value of our common units or result in audit adjustments to a common unitholder’s tax returns.
Our proration methods may be challenged by the IRS, which could change the allocation of items of income, gain, loss,
and deduction among our common unitholders.
We generally (i) prorate our items of income, gain, loss, and deduction between transferors and transferees of our common
units; and (ii) allocate certain deductions for depreciation of capital additions, gain or loss realized on a sale or other disposition
of our assets, and, in the discretion of the general partner, any other extraordinary item of income, gain, loss, or deduction, each
month based upon the ownership of our units on the first day of each month (the “Allocation Date”), instead of on the basis of
the date a particular common unit is transferred. Treasury Regulations allow a similar monthly simplifying convention, but such
regulations do not specifically authorize all aspects of our proration method. If the IRS were to challenge our proration method,
we may be required to change the allocation of items of income, gain, loss, and deduction among our common unitholders.
IRS challenge of certain valuation methodologies we have adopted to determine a unitholder’s allocations of income,
gain, loss, and deduction, could adversely affect the value of our common units.
In determining the items of income, gain, loss, and deduction allocable to our unitholders, we must routinely determine the
fair market value of our assets and allocate any unrealized gain or loss attributable to our assets to the capital accounts of our
unitholders. The IRS may challenge our valuation methods and allocations. A successful IRS challenge to these methods or
allocations could adversely affect the amount of taxable income or loss being allocated to our unitholders, the amount of taxable
gain from our unitholders’ sale of common units, and the value of the common units or result in audit adjustments to our
unitholders’ tax returns without the benefit of additional deductions.
Our common unitholders will likely be subject to state and local taxes, as well as income tax return filing requirements, in
jurisdictions where they do not live as a result of investing in our common units.
In addition to U.S. federal income taxes, our common unitholders may be subject to other taxes, including foreign, state,
and local taxes, unincorporated business taxes, and estate, inheritance, or intangible taxes that are imposed by the various
jurisdictions in which we conduct business or own property now or in the future, even if they do not live in any of those
jurisdictions, will likely be required to file foreign, state, and local income tax returns and pay state and local income taxes in
some or all of these various jurisdictions, and may be subject to penalties for failure to comply with those requirements.
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General Risks Related to the Partnership
The acquisition and expansion strategy of our business involves significant risks that could have a material adverse effect
on our results of operations, financial condition and cash flows.
From time to time, we may consider pursuing acquisitions of businesses or assets and expansion projects (“Expansion
Projects”) to continue to grow and increase profitability. However, we may not be able to consummate such Expansion Projects
due to intense competition for suitable acquisition targets; the potential unavailability of necessary financial resources;
difficulties in identifying suitable Expansion Projects or in completing them on sufficiently favorable terms; and the failure to
obtain requisite regulatory approvals. In addition, any Expansion Projects may entail significant transaction costs and risks
associated with entry into new markets and lines of business, including but not limited to, new regulatory obligations and risks.
In the case of an acquisition, integration of acquired entities can involve significant difficulties, such as: disruption of the
ongoing operations; failure to achieve cost savings or other financial or operating objectives contributing to the accretive nature
of an acquisition; strain on operational and managerial controls, procedures and management; difficulties in the integration and
retention of customers or personnel; assumption of unknown material liabilities or regulatory non-compliance issues; and
amortization of acquired assets, which would reduce future reported earnings; and possible adverse short-term effects on our
cash flows or operating results.
When considering potential Expansion Projects, will also consider impact on our tax treatment as a partnership for U.S.
federal income tax purposes. If we are unable to conclude that the activities of the Expansion Project would not affect our
treatment as a partnership for U.S. federal income tax purposes, we may elect to seek a ruling from the IRS. Seeking such a
ruling could be costly or, in the case of competitive acquisitions, place the business in a competitive disadvantage compared to
other potential acquirers who do not seek such a ruling. If we are unable to conclude that an activity would not affect our
treatment as a partnership for U.S. federal income tax purposes and are unable or unwilling to obtain an IRS ruling, we may
choose to acquire such business or develop such expansion project in a corporate subsidiary, which would subject the income
related to such activity to entity-level taxation, which would reduce the amount of cash available for distribution to our common
unitholders and could likely cause a substantial reduction in the value of our common units.
Internally generated cash flows and other sources of liquidity may not be adequate for our capital needs.
Our business is capital intensive and working capital needs may vary significantly over relatively short periods of time. For
instance, nitrogen fertilizer demand volatility can significantly impact working capital on a week-to-week and month-to-month
basis. If we cannot generate adequate cash flow or otherwise secure sufficient liquidity to meet our working capital needs or
support our short-term and long-term capital requirements, we may be unable to meet our debt obligations, pursue our business
strategies, or comply with certain environmental standards, which would have a material adverse effect on our business and
results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
The Partnership has implemented processes to assess, identify and manage material risks resulting from cybersecurity
incidents. Our Cybersecurity program and processes are based upon the International Standards Organization (“ISO”) guidance
on information security. The Partnership’s processes used to identify, assess, and mitigate cybersecurity risks are integrated into
the Partnership’s broader risk management system and processes, including through the risk management activities of the Board
and its Audit Committee, our Enterprise Risk Management Committee (“ERM Committee”), and our internal audit and
information technology functions.
Board Oversight of Cybersecurity Matters
The board of directors of the Partnership’s general partner (the “Board”) considers oversight of CVR Partners’ risks and
risk management activities, including those related to cybersecurity risk, to be a responsibility of the entire Board. The Board
also delegates certain risk oversight responsibilities to certain of its committees, and oversight of the Partnership’s cybersecurity
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risk is delegated by the Board to its Audit Committee. The Audit Committee receives regular reports, typically on a quarterly
basis, from management regarding information technology, cybersecurity risk, and efforts to prevent and mitigate such risks.
The Chairperson of the Audit Committee subsequently reports on the Partnership’s cybersecurity risk, monitoring, and
mitigation activities to the full Board, which equips the Board and its committees to fulfill their risk oversight role.
The Board and Audit Committee are supported in their oversight capacity by the Partnership’s ERM Committee, and
internal audit and information technology functions. On a quarterly basis, the ERM Committee evaluates past, existing, and
future risks to the Partnership; the likelihood, severity, and velocity of such risks; and the controls and mitigation tools
implemented to address such risk. Several members of the ERM Committee have functional responsibility for the Partnership’s
information technology and cybersecurity risk monitoring activities and provide expertise to the ERM Committee in those
areas.
Likewise, the Partnership’s internal audit function periodically performs audit engagements focused on information
technology processes and cybersecurity risks. These audits have provided the Partnership with assessments of the effectiveness
and efficiency of our information technology and cyber threat management processes with the goal of safeguarding Partnership
assets and information.
Management of Cybersecurity Matters
At the management level, the Partnership’s cybersecurity risk management activities are integrated into the day-to-day
activities of the Partnership’s information technology function led by our Chief Information Officer, who operates under the
supervision of our Chief Financial Officer. The Partnership’s information technology function has a dedicated cybersecurity
team comprised of employees with, on average, nearly 20 years of experience and expertise in cybersecurity, and includes
individuals with degrees in Computer Studies and cybersecurity-related certifications including Certified Information Systems
Security Specialist (CISSP), Certified in Risk and Information Systems Controls (CRISC), and Certified Information Security
Manager (CISM).
Management utilizes certain tools and controls to detect, monitor, prevent, mitigate, and remediate cybersecurity threats to
our systems, networks, applications, and data. Management also conducts annual cybersecurity training and periodic phishing
tests, which provide contemporaneous feedback and instruction to our employees and strengthen the Partnership’s defenses
against cyber threats. Lastly, management maintains information security incident response processes to guide response and
mitigate impact in the event of a cybersecurity incident. A third-party cybersecurity service provider is on retainer to assist the
Partnership should a cybersecurity incident occur.
Engagement of Third Parties
The ERM Committee, internal audit function, information technology function and various other groups each occasionally
engage third-party service providers to assist in their management of cybersecurity risk, including but not limited to
cybersecurity vendors, assessors, consultants, auditors, and other third parties. The information technology function maintains
processes to oversee and identify cyber risks associated with the Partnership’s use of third-party service providers who may
have access to sensitive Partnership data and systems.
Material Impact on Partnership
During 2023, the Partnership did not experience any cybersecurity threats or incidents that have materially affected or are
reasonably likely to materially affect the Partnership, including its business strategy, results of operations, or financial
condition.
Item 2. Properties
Refer to Part I, Item 1, “Facilities” of this Report for more information on our core business properties. CVR Energy also
leases property for our executive and marketing offices in Sugar Land, Texas and Kansas City, Kansas, respectively.
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Item 3. Legal Proceedings
In the ordinary course of business, we may become party to lawsuits, administrative proceedings, and governmental
investigations, including environmental, regulatory, and other matters. Large, and sometimes unspecified, damages or penalties
may be sought from us in some matters and certain matters may require years to resolve. Refer to Part II, Item 8, Note 2
(“Summary of Significant Accounting Policies”), Loss Contingencies for further discussion on current litigation matters.
Although we cannot provide assurance, we believe that an adverse resolution of the matters described therein would not have a
material impact on our liquidity, consolidated financial position, or consolidated results of operations.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market For Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity
Securities
Performance Graph
The performance graph below compares the cumulative total return of the Partnership’s common units to (a) the
cumulative total return of the S&P 500 Composite Index and (b) a composite peer group (“Peer Group”) consisting of CF
Industries Holdings, Inc., LSB Industries, Inc., Nutrien Ltd., The Andersons, Inc., Green Plains Partners LP, and Flotek
Industries Inc. The graph assumes that the value of the investment in common units and each index was $100 on December 31,
2018 and that all distributions were reinvested. Investment is weighted on the basis of market capitalization.
The unit price performance shown on the graph is not necessarily indicative of future price performance. Information used
in the graph was obtained from Yahoo! Finance (finance.yahoo.com). The performance graph above is furnished and not filed
for purposes of the Securities Act and the Exchange Act. The performance graph is not soliciting material subject to Regulation
14A.
Market Information
CVR Partners’ common units are listed under the symbol “UAN” on the New York Stock Exchange (“NYSE”). The
Partnership has 30 holders of record of the outstanding units as of December 31, 2023.
Purchases of Equity Securities by the Issuer
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”), which was increased on February 22, 2021. The Unit
Repurchase Program, as increased, authorized the Partnership to repurchase up to $20 million of the Partnership’s common
units. Through December 31, 2023, the Partnership, considering all repurchases made since inception of the Unit Repurchase
Program, repurchased 759,250 common units, 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, 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. As of December 31, 2023, the
Partnership had a nominal authorized amount remaining under the Unit Repurchase Program. The Unit Repurchase Program
does not obligate the Partnership to acquire any common units and may be cancelled, modified, or terminated by the Board at
December 31, 2023 | 34
CVR PartnersS&P 500Peer Group12/31/1812/31/1912/31/2012/31/2112/31/2212/31/23$0$100$200$300$400 Table of Contents
any time. On February 20, 2024, the Board, on behalf of the Partnership, terminated the nominal authority remaining under the
Unit Repurchase Program.
Item 6. [Reserved]
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 flow 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. 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, 2023 and 2022 and discusses year-to-year comparisons
between such periods. The discussions of the year ended December 31, 2021 and year-to-year comparisons between the years
ended December 31, 2022 and 2021 that are not included in this Annual Report on Form 10-K 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, 2022 filed on February 22, 2023, 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.
Understanding significant external variables, such as market conditions, weather, and seasonal trends, among others, and
management actions taken to manage the Partnership, address external variables, among others, which will increase users’
understanding of the Partnership, its financial condition and results of operations. 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. 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”). 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 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, 2023 | 35
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•
•
•
•
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 plant operations, identifying alternative sources for plant
inputs to reduce lost time due to third-party operational constraints, and optimizing our commercial and marketing
functions to maintain plant 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.
Other Events
Following good faith bargaining by East Dubuque Nitrogen Fertilizers, LLC (“EDNF”), the United Automobile Workers
Union and its Local 1391 representing approximately 90 employees at the East Dubuque Facility went on strike on October 18,
2023 after its collective bargaining agreement expired the previous day. The East Dubuque Facility has continued to operate
and is currently expected to continue normal operations during the strike.
Environmental, Social & Governance (“ESG”) Highlights
In the past year, we achieved numerous milestones through our commitment to ESG initiatives, including environmental
and safety stewardship, diversity and inclusion, community outreach and sound corporate governance. In December 2023, we
published a 2022 Environmental, Social & Governance Report (“2022 ESG Report”) which is based on the Sustainability
Accounting Standards Board standards and is available at CVR Partner’s website at www.CVRPartners.com. The 2022 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.
December 31, 2023 | 36
Table of Contents
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.
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 its products, inflation, and global supply disruptions.
As a result, future operating results and current and long-term financial conditions could be negatively impacted if economic
conditions decline and remain volatile. The Partnership is not able at this time to predict the extent to which these events may
have a material, or any, effect on its financial or operational results in future periods.
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 directly impact our business. In August 2022, the Inflation Reduction Act was passed and introduced the
Clean Fuel Production Credit incentivizing lower Carbon Intensity feedstocks, including corn oil, which may increase demand
for corn planting. 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 April 2023, the EPA announced the proposed federal vehicle emission standards for 2027 through 2032,
which, if finalized, would 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.
Geopolitical Matters - The conflict between Israel and Hamas, which began in October 2023, and the ongoing Russia-
Ukraine war, could significantly impact global fertilizer and agriculture markets. These conflicts pose significant geopolitical
risks to global markets, raise concerns of major implications, such as the enforcement of sanctions, and could disrupt the
production and trade of fertilizer, grains, and feedstock through several means, such as trade restrictions. The ultimate outcome
of these conflicts and any associated market disruptions are difficult to predict and may affect our business, operations, and
cash flows in unforeseen ways.
Partnership Initiatives
The Partnership has been conducting engineering studies on the potential to utilize natural gas as an optional feedstock to
pet coke at its Coffeyville Facility. Based on these studies, CVR Partners subsidiaries could utilize either natural gas or pet coke
to produce nitrogen fertilizer by making certain modifications to the plant. 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 lowest cost
feedstock for production and would make the Coffeyville Facility the only nitrogen fertilizer plant in the U.S. with that
feedstock flexibility.
December 31, 2023 | 37
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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
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 for 2023, 2022, and 2021.
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 12.8 billion pounds of soybean oil is expected to be used in producing cleaner
renewable fuels in marketing year 2023/2024. Multiple refiners have announced renewable diesel expansion projects for 2024
and beyond, which should only increase the demand for soybeans and potentially for corn and canola.
The United States Department of Agriculture (“USDA”) data shows that in spring 2023 farmers planted 94.6 million corn
acres, representing an increase of 6.8% as compared to 88.6 million corn acres in 2022. Planted soybean acres for spring 2023
are 83.6 million, representing a decrease of 4.5% as compared to 87.5 million soybean acres in 2022. The combined corn and
soybean planted acres of 178.2 million in 2023 is an increase of 1.2% compared to the acreage planted in 2022. Due to lower
input costs in 2023 for corn planting and the relative grain prices of corn versus soybeans, economics favored planting corn
compared to soybeans in 2023. Lower inventory levels of corn and soybeans are expected to be supportive of grain prices into
the spring of 2024.
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, 2023.
U.S. Plant Production of Fuel Ethanol (1)
Corn and Soybean Planted Acres (2)
(1)
(2)
Information used within this chart was obtained from the U.S. Energy Information Administration (“EIA”) through December 31, 2023.
Information used within this chart was obtained from the USDA, National Agricultural Statistics Services as of December 31, 2023.
December 31, 2023 | 38
Barrels per day(in thousands)1,075Fuel Ethanol2021202220236008001,0001,20052%50%53%48%50%47%CornSoybean20212022202350%100% Table of Contents
Weather continues to be a critical variable for crop production. Even with high planted acres and trendline yields per acre
in the U.S., global inventory levels for corn and soybeans remain below historical levels and prices have remained elevated.
With tight grain and fertilizer inventory levels driven by the conflict in Ukraine, prices for grains remained elevated through
2023, although below the elevated prices experienced in the spring of 2022. Demand for nitrogen fertilizer, as well as other
crop inputs, was strong for the spring 2023 planting season and fall 2023 ammonia application, primarily due to elevated grain
prices and favorable weather conditions for planting and fertilizer application.
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 2022/2023 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 2023 and remain below the 2021/2022 price levels. The decline
in natural gas prices has led to a significant reduction in the price for nitrogen fertilizer globally due to lower input costs. 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 into 2024. Although pet coke prices
remain elevated compared to historical levels, third-party pet coke prices have declined into 2024.
The charts below show relevant market indicators by month through December 31, 2023:
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, 2023 | 39
$ (per ton)$628$664$291Ammonia — Southern PlainsAmmonia — Corn beltUAN — Corn belt2021202220235001,0001,500
Table of Contents
Natural Gas Market Pricing (1)
Pet Coke Market Pricing (1)
(1)
Information used within these charts was obtained from various third-party sources including Green Markets (a Bloomberg Company),
Pace Petroleum Coke Quarterly, and the EIA, amongst others.
Results of Operations
The following should be read in conjunction with the information outlined in the previous sections of this Part II, Item 7
and the financial statements and related notes thereto in Part II, Item 8 of this Report.
The chart presented below summarizes our ammonia utilization rates on a consolidated basis for the years ended December
31, 2023, 2022, and 2021. Utilization is an important measure used by management to assess operational output at each of the
Partnership’s facilities. Utilization is calculated as actual tons of ammonia produced divided by capacity.
Utilization is presented solely on ammonia production, rather than on each nitrogen product, as it provides a comparative
baseline against industry peers and eliminates the disparity of facility configurations for upgrade of ammonia into other
nitrogen products. With production primarily focused on ammonia upgrade capabilities, we believe this measure provides a
meaningful view of how we operate.
December 31, 2023 | 40
Natural Gas ($ per MMBtu)$2.52Natural Gas NYMEX202120222023246810Pet Coke ($ per ton)$95.61Pet Coke202120222023255075100125 Table of Contents
Consolidated Ammonia Utilization
On a consolidated basis, utilization increased 19% to 100% for the year ended December 31, 2023 compared to the year
ended December 31, 2022. This increase was primarily due to reduced production volumes and utilization during the planned
turnarounds at both facilities in the third quarter of 2022, which subsequently improved operational reliability. In addition, there
was increased unplanned downtime in 2022 associated with the Messer air separation plant (the “Messer Outages”) at the
Coffeyville Facility and various pieces of equipment being down at the East Dubuque Facility.
Sales and Pricing per Ton - Two of our key operating metrics are total sales volumes for ammonia and UAN, along with
the product pricing per ton realized at the gate. Product pricing at the gate represents net sales less freight revenue divided by
product sales volume in tons and is shown in order to provide a pricing measure comparable across the fertilizer industry.
Sales (thousand tons)
Product Pricing at Gate ($ per ton)
For the year ended December 31, 2023, total product sales volumes were favorable driven by reduced production volumes
and utilization during the planned turnarounds at both facilities in the third quarter of 2022, which subsequently improved
operational reliability. In addition, the facilities experienced minimal unplanned downtime in 2023 compared to 2022 due to the
Messer Outages at the Coffeyville Facility and various pieces of equipment being down at the East Dubuque Facility in 2022.
For the year ended December 31, 2023, total product sales were unfavorable driven by sales price decreases of 44% for
ammonia and 36% for UAN during the year. Ammonia and UAN sales prices were unfavorable primarily due to lower natural
gas prices and increased global supplies of nitrogen fertilizers.
December 31, 2023 | 41
% of Capacity100%81%92%20232022202180%100%AmmoniaUAN2811952691,3951,1441,196AmmoniaUAN20232022202115022530037505001,0001,500AmmoniaUAN$573$1,024$544$309$486$264AmmoniaUAN20232022202104008001,200200400600 Table of Contents
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
upgraded into other fertilizer products. The table below presents these metrics for the years ended December 31, 2023, 2022,
and 2021:
(in thousands of tons)
Ammonia (gross produced)
Ammonia (net available for sale)
UAN
Year Ended December 31,
2023
2022
2021
864
270
1,369
703
213
1,140
807
275
1,208
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 both facilities for
the years ended December 31, 2023, 2022, and 2021:
Petroleum coke used in production (thousands of tons)
Petroleum coke used in production (dollars per ton)
Natural gas used in production (thousands of MMBtus) (1)
Natural gas used in production (dollars per MMBtu) (1)
Natural gas in cost of materials and other (thousands of MMBtus) (1)
Natural gas in cost of materials and other (dollars per MMBtu) (1)
$
$
$
Year Ended December 31,
2023
2022
2021
518
78.14 $
8,462
3.42 $
8,671
3.84 $
425
52.88 $
6,905
6.66 $
6,701
6.37 $
514
44.69
8,049
3.95
7,848
3.83
(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, 2023, the Partnership’s operating income and net income were $201.4 million
and $172.4 million, respectively, representing declines of $118.5 million and $114.4 million, respectively, compared to
operating income and net income of $319.9 million and $286.8 million, respectively, for the year ended December 31, 2022.
These variances were primarily driven by decreased product sales prices, offset by increased production and sales volumes,
compared to 2022.
Net Sales
Operating Income
December 31, 2023 | 42
$ (in millions)$681.5$835.6$532.6202320222021350525700875$ (in millions)$201.4$319.9$134.52023202220210100200300400
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 - Net sales decreased by $154.1 million to $681.5 million for the year ended December 31, 2023 compared to the
year ended December 31, 2022. This decrease was primarily due to unfavorable UAN and ammonia pricing conditions which
reduced revenue by $373.5 million, partially offset by increased sales volumes which contributed $210.0 million in higher
revenue compared to the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, net sales included
$42.1 million and $34.8 million in freight revenue and $18.2 million and $11.3 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, 2023 compared to the year ended
December 31, 2022:
(in thousands)
UAN
Ammonia
Price
Variance
Volume
Variance
$
(246,954) $
(126,590)
121,886
88,071
For the year ended December 31, 2023 compared to the year ended December 31, 2022, ammonia and UAN sales prices
were unfavorable primarily due to lower natural gas prices and increased global supplies of nitrogen fertilizers in the current
year. Total product sales volumes were favorable driven by reduced production volumes and utilization during the planned
turnarounds at both facilities in the third quarter of 2022, which subsequently improved operational reliability. In addition, there
was minimal unplanned downtime in 2023 compared to 2022 due to the Messer Outages at the Coffeyville Facility and various
pieces of equipment being down at the East Dubuque Facility in 2022.
December 31, 2023 | 43
$ (in millions)$172.4$286.8$78.22023202220210100200300400$ (in millions)$281.1$403.2$212.72023202220210100200300400500
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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, 2023, cost of materials and other was $134.4 million
compared to $130.9 million for the year ended December 31, 2022. The $3.5 million increase was driven primarily by higher
third-party pet coke feedstock costs, partially offset by lower natural gas feedstock costs in the current period.
Direct Operating Expenses (exclusive of depreciation and amortization) - For the year ended December 31, 2023, direct
operating expenses (exclusive of depreciation and amortization) were $234.9 million compared to $270.2 million for the year
ended December 31, 2022. The $35.3 million decrease was primarily due to turnaround expenses in the prior period associated
with the planned turnarounds taking place at both facilities in the third quarter of 2022, coupled with decreased personnel costs
from share-based compensation and lower natural gas and electricity costs in the current period.
Depreciation and Amortization
Selling, General, and Administrative Expenses
and Loss on Asset Disposal
Depreciation and Amortization Expense - Depreciation and amortization expense decreased $2.4 million for the year ended
December 31, 2023 compared to the year ended December 31, 2022, primarily as a result of various assets being fully
depreciated in the prior period, as well as fluctuations in depreciation capitalized to inventory.
Selling, General, and Administrative Expenses and Loss on Asset Disposal - Selling, general and administrative expenses
and Loss on asset disposal, combined, decreased approximately $1.4 million for the year ended December 31, 2023 compared
December 31, 2023 | 44
$ (in millions)$134.4$130.9$98.320232022202175100125150$ (in millions)$234.9$270.2$198.7202320222021150200250300$ (in millions)$79.7$82.1$73.5202320222021607080$ (in millions)$31.1$32.5$27.620232022202110203040
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to the year ended December 31, 2022. The decrease was primarily related to lower share-based compensation due to a decrease
in market prices for CVR Partners’ common units in the current period.
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, 2023, 2022, and 2021:
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 $1.8 million,
$33.4 million, and $2.9 million during the years ended December 31, 2023, 2022, and 2021, respectively. The next planned
turnarounds are currently scheduled to take place in 2025 at the Coffeyville Facility and in 2026 at the East Dubuque Facility.
December 31, 2023 | 45
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Non-GAAP Reconciliations
Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Available Cash for Distribution
(in thousands)
Net income
Interest expense, net
Income tax expense
Depreciation and amortization
EBITDA and Adjusted EBITDA
Current (reserves) adjustments for operating activities (1)
Current (reserves) adjustments for investing activities (2)
Current (reserves) adjustments for financing activities (3)
Available cash for distribution (4) (5)
Year Ended December 31,
2023
2022
2021
$
172,433 $
286,801 $
28,653
289
79,720
281,095
(40,235)
(52,167)
(500)
34,065
160
82,137
403,163
(37,433)
(27,783)
(78,212)
$
188,193 $
259,735 $
78,155
60,978
57
73,480
212,670
(56,221)
(24,736)
(35,156)
96,557
Common units outstanding
10,570
10,570
10,681
(1)
(2)
Includes reserves for debt service (interest expense) and other future operating needs.
Includes reserves for future capital expenditures, including turnarounds, and other future investing activities, as well as cash impacts
from equity method investments.
Includes reserves for debt financing, repurchase of common units and other future financing activities.
(3)
(4) Amount represents the cumulative available cash based on full year results. However, available cash for distribution is calculated
quarterly, with distributions (if any) being paid in the period following declaration.
(5) The Partnership declared and paid cash distributions of $10.50, $10.43, $4.14, and $1.55 per common unit related to the fourth quarter of
2022, and the first, second, and third quarters of 2023, respectively, and declared a cash distribution of $1.68 per common unit related to
the fourth quarter of 2023, to be paid in March 2024.
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. Our principal uses of cash are for working capital, capital
expenditures, funding our debt service obligations, and paying distributions to our unitholders, as further discussed below.
Current geopolitical matters, such as the conflict between Israel and Hamas and the ongoing Russia-Ukraine war, have
contributed to the volatile fertilizer and agricultural market conditions, driving uncertainty around the availability and prices of
feedstocks, demand for products, inflation, and global supply disruptions. Despite the volatility in commodity pricing, nitrogen
fertilizer product pricing remains above the recent 5-year average and has not significantly impacted our primary source of
liquidity.
When considering the market conditions and actions described above, 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
debt through privately negotiated transactions, open market repurchases, redemptions, exchanges, tender offers or otherwise,
but we are under no obligation to do so. 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.
December 31, 2023 | 46
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On September 26, 2023, CVR Partners and certain of its subsidiaries entered into Amendment No. 1 to the Credit
Agreement (the “ABL Amendment”) with Wells Fargo Bank, National Association, a national banking associate (“Wells
Fargo”), as administrative agent, collateral agent and a lender. The ABL Amendment amended that certain Credit Agreement,
dated as of September 30, 2021 (as amended, the “ABL Credit Facility”), by and among the credit parties thereto and Wells
Fargo, as administrative agent, collateral agent and a lender, to, among other things, (i) increase the aggregate principal amount
available under the credit facility by an additional $15.0 million to a total of $50.0 million in the aggregate, with an incremental
facility of an additional $15.0 million in the aggregate subject to additional lender commitments and certain other conditions,
and (ii) extend the maturity date by an additional four years to September 26, 2028. Refer to Part II, Item 8, Note 8 (“Long-
Term Debt”) of this Report for further discussion.
The Partnership and its subsidiaries were in compliance with all covenants under their respective debt instruments as of
December 31, 2023 and through the date of filing, as applicable.
We do not have any “off-balance sheet arrangements” as such term is defined within the rules and regulations of the SEC.
Cash and Other Liquidity
As of December 31, 2023, we had cash and cash equivalents of $45.3 million, including $2.5 million of customer advances.
Combined with $39.0 million available under our ABL Credit Facility, we had total liquidity of $84.3 million as of December
31, 2023. As of December 31, 2022, we had $86.3 million in cash and cash equivalents, including $13.7 million of customer
advances. Long-term debt consists of the following:
(in thousands)
6.125% Senior Secured Notes, due June 2028
Unamortized debt issuance costs
Total long-term debt
December 31,
2023
2022
550,000
(2,692)
$
547,308 $
550,000
(3,200)
546,800
As of December 31, 2023, the Partnership had the 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 and/or a reduction in direct operating expenses. We
undertake growth capital spending based on the expected return on incremental capital employed.
Our total capital expenditures for the years ended December 31, 2023 and 2022, along with our estimated expenditures for
2024 are as follows:
(in thousands)
Maintenance capital
Growth capital
Total capital expenditures
Year Ended December 31,
2023
2022
Estimated
2024
$
$
28,025 $
1,056
29,081 $
40,793
$32,000 - 35,000
653
12,000 - 13,000
41,446
$44,000 - 48,000
Our estimated capital expenditures are subject to change due to changes in the cost, scope, and completion time for capital
projects. 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 nitrogen fertilizer facilities. We may also
accelerate or defer some capital expenditures from time to time. Capital spending for CVR Partners is determined by the Board.
We will continue to monitor market conditions and make adjustments, if needed, to our current capital spending or turnaround
plans.
December 31, 2023 | 47
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We incurred turnaround expenses of $1.8 million, $33.4 million, and $2.9 million during the years ended December 31,
2023, 2022, and 2021, respectively. The next planned turnarounds are currently scheduled to take place in 2025 at the
Coffeyville Facility and in 2026 at the East Dubuque Facility.
Cash Requirements
The following table summarizes our known contractual obligations and other commercial commitments as of December 31,
2023 that are expected to be paid within the next year and thereafter:
(in thousands)
Debt obligations (1)
Interest payments related to debt obligations (2)
Operating lease liabilities (3)
Purchase commitments (4)
Transportation agreements (5)
Total cash requirements
Payments Due by Period
Short-Term
Long-Term
Total
$
— $
550,000 $
33,941
3,816
48,166
6,665
118,856
10,151
81,324
9,070
$
92,588 $
769,401 $
550,000
152,797
13,967
129,490
15,734
861,989
(1) Debt obligations consist of the 2028 Notes as of December 31, 2023.
(2)
Interest payments related to debt obligations consist of interest payments for our long-term debt outstanding as of December 31, 2023
and commitment fees on the unutilized commitments of the ABL Credit Facility.
(3) Operating lease liabilities are described in Part II, Item 8, Note 6 (“Leases”) of this Report.
(4) Consists primarily of purchase obligations for pet coke 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 generated on a quarterly basis. Available Cash for Distribution for each quarter will be determined
by the Board 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 the release of 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, are subject to change at the discretion of the Board. The following tables present
quarterly distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, during
2023 and 2022 (amounts presented in the table below may not add to totals presented due to rounding):
Related Period
Date Paid
Quarterly Distributions
Per Common Unit
Public
Unitholders
CVR Energy
Total
Quarterly Distributions Paid (in thousands)
March 13, 2023
$
10.5 $
70,115 $
40,866 $
2022 - 4th Quarter
2023 - 1st Quarter
May 22, 2023
2023 - 2nd Quarter
August 21, 2023
2023 - 3rd Quarter
November 20, 2023
10.43
4.14
1.55
69,647
27,646
10,350
40,594
16,113
6,033
110,981
110,241
43,759
16,383
Total 2023 quarterly distributions
$
26.62 $
177,759 $
103,605 $
281,364
December 31, 2023 | 48
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Related Period
Date Paid
Quarterly Distributions
Per Common Unit
Public
Unitholders
CVR Energy
Total
Quarterly Distributions Paid (in thousands)
March 14, 2022
$
5.24 $
35,576 $
20,394 $
2021 - 4th Quarter
2022 - 1st Quarter
May 23, 2022
2022 - 2nd Quarter
August 22, 2022
2022 - 3rd Quarter
November 21, 2022
2.26
10.05
1.77
15,091
67,109
11,819
8,796
39,115
6,889
55,970
23,887
106,225
18,708
Total 2022 quarterly distributions
$
19.32 $
129,597 $
75,193 $
204,790
Related Period
Date Paid
2021 - 2nd Quarter
August 23, 2021
2021 - 3rd Quarter
November 22, 2021
Total 2021 quarterly distributions
$
$
Quarterly Distributions
Per Common Unit
Public
Unitholders
CVR Energy
Total
Quarterly Distributions Paid (in thousands)
1.72 $
11,678 $
6,694 $
2.93
19,893
11,404
4.65 $
31,571 $
18,098 $
18,372
31,297
49,669
There were no quarterly distributions declared or paid by the Partnership related to the first quarter of 2021 and the fourth
quarter of 2020.
For the fourth quarter of 2023, the Partnership, upon approval by the Board on February 20, 2024, declared a distribution
of $1.68 per common unit, or $17.8 million, which is payable March 11, 2024 to unitholders of record as of March 4, 2024. Of
this amount, CVR Energy will receive approximately $6.5 million, 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 (the “Unit Repurchase
Program”), which was increased on February 22, 2021. The Unit Repurchase Program, as increased, authorized the Partnership
to repurchase up to $20 million of the Partnership’s common units. During the year ended December 31, 2023, CVR Partners
did not repurchase any common units. During the years ended December 31, 2022 and 2021, CVR Partners repurchased
111,695 and 24,378 common units, respectively, 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 $12.4 million and $0.5 million,
respectively, exclusive of transaction costs, or an average price of $110.98 and $21.69 per common unit, respectively. As of
December 31, 2023, considering all repurchases made since inception of the Unit Repurchase Program, CVR Partners had a
nominal authorized amount 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. On February 20,
2024, the Board, on behalf of the Partnership, terminated the nominal authority remaining under the Unit Repurchase Program.
Cash Flows
The following table sets forth our cash flows for the periods indicated below:
(in thousands)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net (decrease) increase in cash and cash equivalents
$
(41,060) $
(26,177) $
Year Ended December 31,
2023
2022
2021
$
243,526 $
301,464 $
188,725
(2,722)
(44,623)
(281,864)
(283,018)
(20,342)
(86,426)
81,957
December 31, 2023 | 49
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Operating Activities
The change in net cash flows from operating activities for the year ended December 31, 2023 as compared to the year
ended December 31, 2022 is primarily due to a $114.4 million decrease in net income as a result of lower product prices,
partially offset by increased sales volumes and a $17.0 million decrease in noncash share-based compensation as a result of
lower market prices for CVR Partners’ units. This is partially offset by an increase in working capital of $70.6 million primarily
due to increases in accounts receivable and inventories, partially offset by decreases in accounts payable and deferred revenue.
Investing Activities
The change in net cash used in investing activities for the year ended December 31, 2023 compared to the year ended
December 31, 2022 was primarily due to distributions received from CVR Partners’ equity method investment of $21.5 million
associated with the 45Q Transaction in 2023 and a decrease in capital expenditures of $20.5 million during 2023 resulting from
reduced spending on capital projects compared to 2022.
Financing Activities
The change in net cash used in financing activities for the year ended December 31, 2023 compared to the year ended
December 31, 2022 was primarily due to an increase of $76.6 million in cash distributions paid in 2023 compared to 2022. This
is partially offset by decreases of $65.0 million and $12.4 million used for the redemption of the remaining balance of the 2023
Notes and unit repurchases of the Partnership’s common units in 2022, respectively, with no corresponding amounts in 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 at each of our facilities. Depending on inventory levels, the per-ton realizable value of our fertilizer
products is estimated using pricing on in-transit orders, pricing for open, fixed-price orders that have not shipped, and, if
volumes remain unaccounted for, current management pricing estimates for fertilizer products. Management’s estimate for
current pricing reflects up-to-date pricing in each facility’s market as of the end of each reporting period. Reductions to selling
prices for unreimbursed freight costs are included to arrive at net realizable value, as applicable. There were no inventory
adjustments recognized during the years ended December 31, 2023, 2022, and 2021. 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 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
December 31, 2023 | 50
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which there are identifiable cash flows that are largely independent of the cash flows of other assets (for example, at a fertilizer
facility level). 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Commodity Price Risk
We are exposed to significant market risk due to potential changes in prices for fertilizer products, pet coke, and natural
gas. Natural gas is the primary raw material used in the production of various nitrogen-based products manufactured at our East
Dubuque Facility. We have commitments to purchase natural gas for use in our East Dubuque Facility at the spot market and
through short-term, fixed supply, fixed price, and index price purchase contracts.
In the normal course of business, we produce nitrogen-based fertilizer products throughout the year to supply the needs of
our customers during the high-delivery-volume spring and fall seasons. The value of fertilizer product inventory is subject to
market risk due to fluctuations in the relevant commodity prices. Prices of nitrogen fertilizer products can be volatile, and we
believe they are affected by changes in grain prices, demand, natural gas prices, and other factors. In the opinion of our
management, there are no financial instruments that correlate with our firm commitments and forecasted commodity sales
transactions and could be used to effectively reduce commodity price risk.
December 31, 2023 | 51
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Item 8. 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, 2023 and 2022
Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Partners’ Capital for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021
Notes to the Consolidated Financial Statements
53
55
56
57
58
59
December 31, 2023 | 52
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Report of Independent Registered Public Accounting Firm
The Board of Directors of CVR GP, LLC
The Unitholders of CVR Partners, LP
The General Partner of CVR Partners, LP:
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of CVR Partners, LP (a Delaware limited partnership) and
subsidiaries (the “Partnership”) as of December 31, 2023 and 2022, the related consolidated statements of operations, partners’
capital, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Partnership as of December 31, 2023 and 2022, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in
the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2023, based on criteria established in
the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated February 21, 2024, expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion
on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
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.
Wichita, Kansas
February 21, 2024
December 31, 2023 | 53
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Report of Independent Registered Public Accounting Firm
The Board of Directors of CVR GP, LLC
The Unitholders of CVR Partners, LP
The General Partner of CVR Partners, LP:
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of CVR Partners, LP (a Delaware limited partnership) and
subsidiaries (the “Partnership”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the
Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023,
based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Partnership as of and for the year ended December 31, 2023, and our
report dated February 21, 2024 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Wichita, Kansas
February 21, 2024
December 31, 2023 | 54
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CVR PARTNERS, LP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
2023
2022
$
45,279 $
41,893
69,165
9,532
165,869
761,023
48,440
86,339
90,448
77,518
11,399
265,704
810,994
23,704
$
975,332 $
1,100,402
LIABILITIES AND PARTNERS’ CAPITAL
(in thousands)
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant, and equipment, net
Other long-term assets
Total assets
Current liabilities:
Accounts payable
Accounts payable to affiliates
Deferred revenue
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt, net
Long-term deferred revenue
Other long-term liabilities
Total long-term liabilities
Commitments and contingencies (See Note 11)
Partners’ capital:
Common unitholders, 10,569,637 and 10,569,637 units issued and outstanding as
of December 31, 2023 and 2022, respectively
General partner interest
Total partners’ capital
Total liabilities and partners’ capital
$
975,332 $
1,100,402
The accompanying notes are an integral part of these consolidated financial statements.
December 31, 2023 | 55
33,486
5,319
15,796
20,872
75,473
547,308
33,311
16,360
596,979
302,879
1
302,880
45,522
5,302
47,516
27,717
126,057
546,800
—
15,734
562,534
411,810
1
411,811
Table of Contents
CVR PARTNERS, LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
Net sales
Operating costs and expenses:
Cost of materials and other
Direct operating expenses (exclusive of depreciation and amortization)
Depreciation and amortization
Cost of sales
Selling, general and administrative expenses
Loss on asset disposal
Operating income
Other (expense) income:
Interest expense, net
Other (expense) income, net
Income before income tax expense
Income tax expense
Net income
Basic and diluted earnings per common unit
Weighted-average common units outstanding:
Basic and diluted
Year Ended December 31,
2023
2022
2021
$
681,477 $
835,584 $
532,581
134,377
234,916
79,720
449,013
29,523
1,533
201,408
130,913
270,167
82,137
483,217
32,192
263
98,345
198,714
73,480
370,539
26,615
948
319,912
134,479
(28,653)
(34,065)
(60,978)
(33)
172,722
289
1,114
286,961
160
4,711
78,212
57
172,433 $
286,801 $
78,155
16.31 $
27.07 $
7.31
$
$
10,570
10,593
10,685
The accompanying notes are an integral part of these consolidated financial statements.
December 31, 2023 | 56
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CVR PARTNERS, LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in thousands, except unit data)
Balance at December 31, 2020
Net income
Repurchase of common units
Common Units
Issued
Amount
General
Partner
Interest
Total Partners’
Capital
10,705,710 $
314,240 $
1 $
314,241
—
78,155
(24,378)
(529)
Cash distributions to common unitholders – Affiliates
Cash distributions to common unitholders – Non-affiliates
—
—
Balance at December 31, 2021
Net income
Repurchase of common units
Cash distributions to common unitholders – Affiliates
Cash distributions to common unitholders – Non-affiliates
Balance at December 31, 2022
Net income
Cash distributions to common unitholders – Affiliates
Cash distributions to common unitholders – Non-affiliates
10,681,332
—
(111,695)
—
—
10,569,637
—
—
—
(18,098)
(31,571)
342,197
286,801
(12,398)
(75,193)
(129,597)
411,810
172,433
(103,605)
(177,759)
—
—
—
—
1
—
—
—
—
1
—
—
—
78,155
(529)
(18,098)
(31,571)
342,198
286,801
(12,398)
(75,193)
(129,597)
411,811
172,433
(103,605)
(177,759)
Balance at December 31, 2023
10,569,637 $
302,879 $
1 $
302,880
The accompanying notes are an integral part of these consolidated financial statements.
December 31, 2023 | 57
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CVR PARTNERS, LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Amortization of deferred financing costs and original issue discount
Loss on asset disposal
Loss on debt extinguishment
Share-based compensation
Other adjustments
Changes in assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable
Deferred revenue
Accrued expenses and other current liabilities
Other long-term assets and liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from the sale of assets
Return of equity method investment
Net cash used in investing activities
Cash flows from financing activities:
Principal payments on senior secured notes
Proceeds on issuance of senior secured notes
Payment of deferred financing costs
Repurchase of common units
Cash distributions to common unitholders – Affiliates
Cash distribution to common unitholders – Non-affiliates
Other financing activities
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Year Ended December 31,
2023
2022
2021
$
172,433 $
286,801 $
78,155
79,720
754
1,533
—
8,235
222
27,501
6,704
1,911
(23,831)
(23,491)
(8,412)
247
243,526
82,137
821
263
628
25,264
(107)
(21,139)
(24,807)
(2,278)
(6,577)
(20,502)
(14,939)
(4,101)
301,464
(24,196)
(44,668)
—
21,474
(2,722)
45
—
(44,623)
—
—
(500)
—
(103,605)
(177,759)
—
(281,864)
(41,060)
86,339
45,279 $
(65,000)
—
(829)
(12,398)
(75,193)
(129,597)
(1)
(283,018)
(26,177)
112,516
86,339 $
73,480
2,799
948
8,462
23,069
142
(21,877)
(7,508)
(785)
11,367
26,658
(7,182)
997
188,725
(20,594)
252
—
(20,342)
(582,240)
550,000
(3,892)
(529)
(18,098)
(31,571)
(96)
(86,426)
81,957
30,559
112,516
$
The accompanying notes are an integral part of these consolidated financial statements.
December 31, 2023 | 58
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Nature of Business
CVR Partners, LP (“CVR Partners” or the “Partnership”) is a Delaware limited partnership formed by CVR Energy, Inc.
(together with its subsidiaries, but excluding the Partnership and its subsidiaries, “CVR Energy”) to own, operate and grow its
nitrogen fertilizer business. The Partnership produces nitrogen fertilizer products at two manufacturing facilities, one located in
Coffeyville, Kansas operated by our wholly owned subsidiary, Coffeyville Resources Nitrogen Fertilizers, LLC (“CRNF”) (the
“Coffeyville Facility”) and one located in East Dubuque, Illinois operated by our wholly owned subsidiary, East Dubuque
Nitrogen Fertilizers, LLC (“EDNF”) (the “East Dubuque Facility”). Both facilities manufacture ammonia and are able to further
upgrade such ammonia to other nitrogen fertilizer products, principally urea ammonium nitrate (“UAN”). Nitrogen fertilizer is
used by farmers to improve the yield and quality of their crops, primarily corn and wheat. The Partnership’s products are sold
on a wholesale basis in the United States of America. As used in these financial statements, references to CVR Partners, the
Partnership, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Partners or one or both of the facilities, as the
context may require.
Interest Holders
As of December 31, 2023, public common unitholders held approximately 63% of the Partnership’s outstanding limited
partner interests; CVR Services, LLC (“CVR Services”), a wholly-owned subsidiary of CVR Energy, held the remaining
approximately 37% of the Partnership’s outstanding limited partner interests; and CVR GP, LLC (“General Partner”), a wholly
owned subsidiary of CVR Energy, held 100% of the Partnership’s general partner interest. As of December 31, 2023, Icahn
Enterprises L.P. and its affiliates owned approximately 66% of the common stock of CVR Energy.
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”), which was increased on February 22, 2021. The Unit
Repurchase Program, as increased, authorized the Partnership to repurchase up to $20 million of the Partnership’s common
units. During the year ended December 31, 2023, the Partnership did not repurchase any common units. During the years ended
December 31, 2022 and 2021, the Partnership repurchased 111,695 and 24,378 common units, respectively, 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 $12.4 million and $0.5 million, respectively, exclusive of transaction costs, or an average price of $110.98
and $21.69 per common unit, respectively. As of December 31, 2023, the Partnership, considering all repurchases made since
inception of the Unit Repurchase Program, had a nominal authorized amount remaining under the Unit Repurchase Program.
This Unit Repurchase Program does not obligate the Partnership to purchase any common units and may be cancelled,
modified, or terminated by the Board at any time. On February 20, 2024, the Board, on behalf of the Partnership, terminated the
nominal authority remaining under the Unit Repurchase Program.
Management and Operations
The Partnership, including the General Partner, is managed by a combination of the Board, the general partner’s executive
officers, CVR Services (as sole member of the general partner), and certain officers of CVR Energy and its subsidiaries,
pursuant to the Partnership Agreement, as well as a number of agreements among the Partnership, the General Partner, CVR
Energy, and certain of their respective subsidiaries, including a service agreement. See Note 12 (“Related Party Transactions”)
for further discussion. Common unitholders have limited voting rights on matters affecting the Partnership and have no right to
elect the general partner’s directors or officers, whether on an annual or continuing basis or otherwise.
Section 45Q Transaction
Certain carbon oxide capture and sequestration activities conducted at or in connection with the Coffeyville Facility qualify
under the Internal Revenue Service (“IRS”) safe harbor described in Revenue Procedure 2020-12 for certain tax credits
available to joint ventures under Section 45Q of the Internal Revenue Code of 1986, as amended (“Section 45Q Credits”). In
January 2023, CVR Partners and its subsidiary entered into a series of agreements with CapturePoint LLC, an unaffiliated
Texas limited liability company, and certain unaffiliated third-party investors intended to qualify under the IRS safe harbor,
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
described in Revenue Procedure 2020-12, for certain joint ventures that are eligible to claim Section 45Q Credits and allow us
to monetize Section 45Q Credits we expect to generate from January 6, 2023 until March 31, 2030 (the “45Q Transaction”).
Among other items, the 45Q Transaction resulted in the creation of a joint venture entity, CVR-CapturePoint Parent LLC
(“CVRP JV”), which was accounted for by the Partnership as an equity-method investment. See Note 5 (“Equity Method
Investments”) for further discussion.
Subsequent Events
The Partnership evaluated subsequent events, if any, that would require an adjustment to the Partnership’s consolidated
financial statements or require disclosure in the notes to the consolidated financial statements through the date of issuance of
these consolidated financial statements. Where applicable, the notes to these consolidated financial statements have been
updated to discuss all significant subsequent events which have occurred.
(2) Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements, prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) and in accordance with the rules and regulations of the Securities and Exchange
Commission (“SEC”), include the accounts of CVR Partners and its wholly-owned subsidiaries. All intercompany accounts and
transactions have been eliminated.
Reclassifications
Certain immaterial reclassifications have been made within the consolidated financial statements for prior periods to
conform with current presentation.
Use of Estimates
The consolidated financial statements are prepared in conformity with GAAP, which requires management to make certain
estimates and assumptions that affect the reported amounts and disclosure of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Estimates are reviewed on an
ongoing basis, based on currently available information. Changes in facts and circumstances may result in revised estimates,
and actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits, and investments in highly liquid money market accounts
with original maturities of three months or less. We maintain cash and cash equivalent balances with a single financial
institution, which may at times be in excess of federally insured levels.
Accounts Receivable, net
Accounts receivable, net primarily consists of customer accounts receivable recorded at the invoiced amounts and generally
do not bear interest. Allowances for doubtful accounts are based on historical loss experience, expected credit losses from
current economic conditions, and management’s expectations of future economic conditions. The allowance is recorded when
the receivable is deemed uncollectible and is booked to bad debt expense. The largest concentration of credit for any one
customer was approximately 40% and 45% of the Accounts receivable, net balance at December 31, 2023 and 2022,
respectively. There was no bad debt expense for the years ended December 31, 2023 and 2022, respectively. For the year ended
December 31, 2021, bad debt expense was $0.2 million.
Inventories
Inventories consist of fertilizer products and raw materials (primarily pet coke), which are valued at the lower of GAAP
First-In, First-Out (“FIFO”) cost or net realizable value. Inventories also include parts and supplies that are valued at the
weighted moving-average cost, which approximates FIFO. The cost of inventories includes inbound freight costs.
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property, Plant and Equipment, net
Additions to property, plant and equipment, including capitalized interest and certain costs allocable to construction and
property purchases, are recorded at cost. Expenditures for improvements that increase economic benefit or returns and/
or extend useful life are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of
the various classes of depreciable assets. The lives used in computing depreciation for significant asset classes are as follows:
Asset
Land improvements
Buildings and improvements
Automotive equipment
Machinery and equipment
Other
Range of Useful
Lives, in Years
10 to 30
3 to 30
5 to 30
1 to 30
3 to 10
Leasehold improvements and assets held under finance leases are depreciated or amortized utilizing the straight-line
method over the shorter of the contractual lease term or the estimated useful life of the asset. Expenditures for routine
maintenance and repair costs are expensed when incurred and are reported in Direct operating expenses (exclusive of
depreciation and amortization) in the Partnership’s Consolidated Statements of Operations.
Equity Method Investments
The Partnership accounts for investments in which it has a noncontrolling interest, yet has significant influence over the
entity, using the equity method of accounting, whereby the Partnership records its pro-rata share of earnings, contributions to,
and distributions from joint ventures as adjustments to the investment balance in Other long-term assets on our Consolidated
Balance Sheets. The pro-rata share of earnings is also recorded in Other (expense) income, net on our Consolidated Statements
of Operations.
Leases
At inception, the Partnership determines whether an arrangement is a lease and, if so, the appropriate lease classification.
Operating leases are included as operating lease right-of-use (“ROU”) assets within Other long-term assets and lease liabilities
within Other current liabilities and Other long-term liabilities on our Consolidated Balance Sheets. When applicable, finance
leases are included as ROU finance leases within Property, plant, and equipment, net, and finance lease liabilities within Other
current liabilities and Long-term debt, net of current portion on our Consolidated Balance Sheets. Leases with an initial
expected term of 12 months or less are considered short-term and are not recorded on our Consolidated Balance Sheets. The
Partnership recognizes lease expense for these leases on a straight-line basis over the expected lease term.
ROU assets and lease liabilities are recognized at the lease 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. 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 periodic lease payments are treated as payments of the lease obligation and interest is
recorded as interest expense. A lease modification is assessed to conclude whether it is a separate new contract or a modified
contract. If it is a modified contract, the Partnership reconsiders the lease classification and remeasures the lease.
Deferred Financing Costs
Lender and other third-party costs associated with debt issuances are deferred and amortized to interest expense and other
financing costs using the effective-interest method over the term of the debt. Deferred financing costs related to line-of-credit
arrangements are amortized using the straight-line method through the maturity date of the facility. The deferred financing costs
are included net within Long-term debt, net and in Other long-term liabilities for the line-of-credit arrangements where no debt
balance exists.
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impairment of Long-Lived Assets
Long-lived assets (excluding 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 or asset group 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 the
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.
Asset Retirement Obligations
The Partnership records an asset retirement obligation (“ARO”) at fair value for the estimated cost to retire a tangible long-
lived asset at the time the liability is incurred, which is generally when the asset is purchased, constructed, or leased. The
liability is recorded when there is a legal or contractual obligation to incur costs to retire the asset and only when a reasonable
estimate of the fair value can be made.
Certain of the Partnership’s assets can be used for extended or indeterminate periods of time with proper maintenance and
upgrades, which the Partnership intends, and has a historical practice of, to maintain and upgrade as technological advances are
made available. As a result, the Partnership believes these assets have indeterminate lives for purposes of estimating AROs. A
liability will be recognized at such time when sufficient information exists to estimate a date or range of potential settlement
dates needed to employ a present value technique to estimate fair value.
Loss Contingencies
In the ordinary course of business, CVR Partners may become party to lawsuits, administrative proceedings, and
governmental investigations, including environmental, regulatory, and other matters. The outcome of these matters cannot
always be predicted accurately, but the Partnership accrues liabilities for these matters if the Partnership has determined that it
is probable a loss will be incurred and the loss can be reasonably estimated. Accrued amounts, if any, are reflected in Other
current liabilities or Other long-term liabilities on our Consolidated Balance Sheets depending on when the Partnership expects
to expend such amounts. As of December 31, 2023 and 2022, there are no matters or contingencies that require recognition or
disclosure.
Environmental, Health & Safety (“EH&S”) Matters
The Partnership is subject to various stringent federal, state, and local environmental, health, and safety rules and
regulations. Liabilities related to future remediation costs of past environmental contamination of properties are recognized
when the related costs are considered probable and can be reasonably estimated. Estimates of these costs are based upon
currently available facts, internal and third-party assessments of contamination, available remediation technology, site-specific
costs, and currently enacted laws and regulations. In reporting environmental liabilities, no offset is made for potential
recoveries. Loss contingency accruals, including those for environmental remediation, are subject to periodic management
review and revision as further information develops or circumstances change and such accruals can take into account the legal
liability of other parties. Environmental expenditures for capital assets are capitalized at the time of the expenditure when such
costs provide future economic benefits. Accrued amounts, if any, are reflected in Other current liabilities or Other long-term
liabilities on our Consolidated Balance Sheets depending on when the Partnership expects to expend such amounts. As of
December 31, 2023 and 2022, no liabilities have been recognized for environmental remediation matters, as no matters have
been identified that are considered to be probable and estimable.
Revenue Recognition
The Partnership’s revenue is generated from contracts with customers and is recognized at a point in time when
performance obligations are satisfied by transferring control of the products or services to a customer. The transfer of control
occurs upon delivery of the product, as the customer accepts the product, has title and significant risks and rewards of
ownership of the product, physical possession of the product has been transferred, and we have the right to payment.
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The transaction prices of the Partnership’s contracts are either fixed or based on market indices, and any uncertainty related
to the variable consideration when determining the transaction price is resolved on the pricing date or the date when the product
is delivered. The payment terms depend on the product and type of contract, but generally require customers to pay within 30
days or less, and do not contain significant financing components.
Any pass-through finished goods delivery costs reimbursed by customers are reported in Net sales, while an offsetting
expense is included in Cost of materials and other. Non-monetary product exchanges which are entered into in the normal
course of business are included on a net cost basis in Cost of materials and other on our Consolidated Statements of Operations.
Qualifying excise and other taxes collected from customers and remitted to governmental authorities are recorded as a reduction
of the transaction price.
Certain sales contracts require customer prepayment prior to product delivery to guarantee a price and supply of nitrogen
fertilizer. 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 contract amounts.
Cost Classifications
Cost of materials and other consists primarily of freight and distribution expenses, feedstock expenses, purchased
ammonia, and purchased hydrogen. Direct operating expenses (exclusive of depreciation and amortization) consist primarily of
energy and other utility costs, direct costs of labor, property taxes, plant-related maintenance services, including turnaround
expenses, and environmental and safety compliance costs, as well as catalyst and chemical costs. Each of these financial
statement line items are also impacted by changes in inventory balances, as they include inventory production costs. Direct
operating expenses also include allocated share-based compensation from CVR Energy and its subsidiaries. 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.
Fair Value of Financial Instruments
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic
820, Fair Value Measurements and Disclosures (“Topic 820”), the Partnership utilizes the market approach to measure fair
value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market
transactions involving identical or comparable assets, liabilities, or a group of assets or liabilities, such as a business.
Topic 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into
three broad levels. The following is a brief description of those three levels:
•
•
•
Level 1 — Quoted prices in active markets for identical assets or liabilities
Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or
liabilities)
Level 3 — Significant unobservable inputs (including the Partnership’s own assumptions in determining the fair value)
Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and operating lease
obligations are carried at cost and approximate their estimated fair value. The Partnership may enter into forward contracts with
fixed or indexed delivery prices to purchase portions of its natural gas requirements. These natural gas contracts are not treated
as derivatives as they qualify for the normal purchase and normal sale exclusions. Accordingly, the fair value of these contracts
are not recorded at the end of each reporting period.
Turnaround Expenses
Turnarounds represent major maintenance activities that require the shutdown of significant parts of a plant to perform
necessary inspections, cleanings, repairs, and replacements of assets. Costs incurred for routine repairs and maintenance or
unplanned outages at our facilities are expensed as incurred. Planned turnaround activities vary in frequency dependent on our
facilities, but generally occur every three years.
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Partnership follows the direct-expense method of accounting for turnaround activities. Costs associated with these
turnaround activities are included in Direct operating expenses (exclusive of depreciation and amortization) on our
Consolidated Statements of Operations. During the years ended December 31, 2023, 2022, and 2021, the Partnership incurred
turnaround expenses of $1.8 million, $33.4 million, and $2.9 million, respectively.
Share-Based Compensation
The Partnership accounts for share-based compensation in accordance with FASB ASC Topic 718, Compensation — Stock
Compensation. Currently, all of the Partnership’s share-based compensation awards are liability-classified and are measured at
fair value at the end of each reporting period based on the applicable closing unit price. Compensation expense will fluctuate
based on changes in the applicable unit price value and expense reversals resulting from employee terminations prior to award
vesting. There were no dilutive awards outstanding during the years ended December 31, 2023, 2022, and 2021.
Income Taxes
The Partnership is not a taxable entity for federal income tax purposes or states that follow the federal income tax treatment
of partnerships. Instead, for purposes of these income taxes, each partner of the Partnership is required to take into account its
share of items of income, gain, loss and deduction in computing its federal and state income tax liabilities, regardless of whether
cash distributions are made to such partner by the Partnership. We are subject to income taxes in certain states that do not
follow the federal tax treatment of partnerships. These taxes are accounted for utilizing the asset and liability approach. Under
this method, deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to
differences between the amounts recorded in the accounting books and their respective tax basis. Deferred amounts are
measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be
recovered or settled.
Allocation of Costs
CVR Energy and its subsidiaries provide a variety of services to the Partnership, including employee benefits provided
through CVR Energy’s benefit plans, administrative services provided by CVR Energy’s employees and management,
insurance, and office space leased by CVR Energy. As such, the accompanying consolidated financial statements include costs
that have been incurred by CVR Energy on behalf of the Partnership. These amounts incurred by CVR Energy are then billed or
allocated to the Partnership and are classified on our Consolidated Statements of Operations as either Direct operating expenses
(exclusive of depreciation and amortization) or as Selling, general and administrative expenses.
Recent Accounting Pronouncements - Accounting Standards Issued But Not Yet Implemented
In December 2023, FASB issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740) -
Improvements to Income Tax Disclosures, which requires enhanced income tax disclosures that reflect how operations and
related tax risks, as well as how tax planning and operational opportunities, affect the tax rate and prospects for future cash
flows. This standard is effective for the Partnership beginning January 1, 2025 with early adoption permitted. The Partnership is
evaluating the effects of adopting this new accounting guidance on its disclosures but does not currently expect adoption will
have a material impact on the Partnership’s consolidated financial statements. The Partnership does not intend to early adopt
this ASU.
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment
Disclosures, which includes requirements for more robust disclosures of significant segment expenses and measures of a
segment’s profit and loss used in assessing performance. This standard is effective for the Partnership’s annual period
beginning January 1, 2024 and interim periods beginning January 1, 2025 with early adoption permitted. The Partnership is still
evaluating the effects of adopting this new accounting guidance on its disclosures.
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(3) Inventory
CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Inventories consisted of the following:
(in thousands)
Finished goods
Raw materials
Parts, supplies and other
Total inventories
(4) Property, Plant and Equipment
Property, plant, and equipment, net consisted of the following:
(in thousands)
Machinery and equipment
Buildings and improvements
Automotive equipment
Land and improvements
Construction in progress
Other
$
$
$
December 31,
2023
2022
15,015 $
2,472
51,678
69,165 $
28,630
3,116
45,772
77,518
December 31,
2023
1,446,728 $
18,193
16,208
14,959
19,075
2,758
2022
1,432,875
17,461
16,377
14,604
7,858
3,035
1,492,210
(681,216)
810,994
Less: Accumulated depreciation and amortization
Total property, plant and equipment, net
1,517,921
(756,898)
$
761,023 $
For the years ended December 31, 2023, 2022, and 2021, depreciation and amortization expenses were $78.9 million,
$81.3 million, and $72.4 million, respectively, and capitalized interest was $0.5 million, $0.8 million, and $0.8 million,
respectively. During the years ended December 31, 2023, 2022, and 2021, the Partnership updated the estimated useful lives of
certain assets as a result of the turnarounds at our facilities and changes in the granular urea production, which resulted in
additional depreciation expense of $0.7 million, $12.7 million and $4.5 million, respectively.
During the years ended December 31, 2023, 2022, and 2021, the Partnership had not identified the existence of an
impairment indicator for our long-lived asset groups as outlined under the FASB ASC Topic 360, Property, Plant, and
Equipment.
(5) Equity Method Investments
As part of the 45Q Transaction, the Partnership received a 50% ownership interest in CVRP JV in connection with a
modification to a carbon oxide contract (“CO Contract”) with a customer. The Partnership applied the variable interest entity
(“VIE”) model under FASB ASC Topic 810, Consolidation, to its variable interest in CVRP JV and determined that CVRP JV
is a VIE. While the Partnership concluded it is not the primary beneficiary of CVRP JV, it does have significant influence over
CVRP JV’s operating and financial policies and, therefore, applied the equity method of accounting for its investment in CVRP
JV.
The Partnership valued the equity interest received using a combination of the market approach and the discounted cash
flow methodology with key inputs including the discount rate, contractual and expected future cash flows, and market
multiples. The Partnership determined the estimated fair value of the consideration received to be $46.0 million, which was a
non-recurring Level 3 measurement, as defined by FASB ASC Topic 820, Fair Value Measurements, based on the use of the
Partnership’s own assumptions described above. There were no transfers into or out of Level 3 during the year ended December
31, 2023.
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Partnership deferred the recognition of the noncash consideration received and has recognized such revenue as the
performance obligation associated with the CO Contract is satisfied. Refer to Note 9 (“Revenue”) for further discussion. The
Partnership has elected to record its share of the earnings or loss of CVRP JV one quarter in arrears. Distributions received from
CVRP JV will reduce the Partnership’s equity method investment and will be recorded in the period they are received. The
investment in CVRP JV is presented within Other long-term assets on our Consolidated Balance Sheets.
(in thousands)
Balance at inception
Cash contributions
Cash distributions (1)
Equity loss
Balance at December 31, 2023
$
CVRP JV
46,000
13
(21,485)
(10)
$
24,518
(1) Of this amount, approximately $0.9 million related to incremental costs associated with obtaining the CO Contract were capitalized and
included in Prepaid expenses and other current assets and Other long-term assets on our Consolidated Balance Sheets.
As a result of exceeding certain carbon oxide capture and sequestration milestones during 2023, in February 2024, the
Partnership received a $2.2 million distribution from CVRP JV which will be recognized in the first quarter of 2024.
(6) Leases
Lease Overview
We lease railcars and certain facilities to support the Partnership’s operations. Most of our leases include one or more
renewal options to extend the lease term, which can be exercised at our sole discretion. Certain leases also include options to
purchase the leased asset. Additionally, 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. Furthermore, we do not have any material lessor or sub-leasing arrangements.
Balance Sheet Summary as of December 31, 2023 and 2022
The following table summarizes the ROU asset and lease liability balances for the Partnership’s operating leases at
December 31, 2023 and 2022. There were no finance lease balances at December 31, 2023 and 2022.
(in thousands)
ROU asset, net
Railcars
Real estate and other
Lease liability
Railcars
Real estate and other
December 31, 2023
December 31, 2022
$
12,032 $
2,007
12,032
268
10,449
2,370
10,449
456
Lease Expense Summary for the Years Ended December 31, 2023, 2022, and 2021
We recognize operating lease expense on a straight-line basis over the lease term within Direct operating expenses
(exclusive of depreciation and amortization) and Cost of materials and other and finance lease expense on a straight-line basis
December 31, 2023 | 66
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
over the lease term within Depreciation and amortization. For the years ended December 31, 2023, 2022, and 2021, we
recognized lease expense comprised of the following components:
(in thousands)
Operating lease expense
Finance lease expense:
Amortization of ROU asset
Interest expense on lease liability
Short-term lease expense
Lease Terms and Discount Rates
Year Ended December 31,
2023
2022
2021
$
4,664 $
4,230 $
3,827
—
—
34
—
3,022
2,839
102
2
1,174
The following outlines the remaining lease terms and discount rates used in the measurement of the ROU assets and lease
liabilities of the Partnership’s operating leases at December 31, 2023 and 2022:
Weighted-average remaining lease term
Weighted-average discount rate
Maturities of Lease Liabilities
December 31, 2023
December 31, 2022
4.0 years
6.5 %
4.3 years
5.5 %
The following summarizes the remaining minimum operating lease payments through maturity of the Partnership’s lease
liabilities at December 31, 2023:
(in thousands)
Year Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: imputed interest
Total lease liability
Operating Leases
$
$
3,816
3,389
3,128
2,844
790
—
13,967
(1,667)
12,300
The Partnership has entered into the following material lease commitments that have not yet commenced:
•
On February 21, 2022, CRNF entered into the First Amendment to the On-Site Product Supply Agreement with
Messer LLC (“Messer”), which amended the July 31, 2020 On-Site Product Supply Agreement (as amended, the
“Messer Agreement”). Under the Messer Agreement, among other obligations, Messer is obligated to supply oxygen
and make certain capital improvements during the term of the Messer Agreement, and CRNF is obligated to take as
available and pay for oxygen from Messer’s facility. This arrangement for CRNF’s purchase of oxygen from Messer
does not meet the definition of a lease under FASB ASC Topic 842, Leases (“Topic 842”), as CRNF does not expect
to receive substantially all of the output, which includes oxygen, nitrogen and compressed air, 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 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 CRNF 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 finance lease with an estimated amount within the range of $20 million to $25 million being capitalized
December 31, 2023 | 67
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
upon lease commencement when the Vessel is placed in service, which is currently expected to occur in the second
half of 2024.
(7) Other Current Liabilities
Other current liabilities were as follows:
(in thousands)
Personnel accruals
Operating lease liabilities
Accrued taxes other than income taxes
Sales incentives
Accrued interest
Share-based compensation
Other accrued expenses and liabilities
Total other current liabilities
(8) Long-Term Debt
Long-term debt, net consists of the following:
(in thousands)
6.125% Senior Secured Notes, due June 2028 (1)
Unamortized debt issuance costs
Total long-term debt
December 31,
2023
2022
$
8,404 $
3,176
1,825
1,585
1,404
1,195
3,283
7,539
2,931
1,789
1,772
1,404
9,231
3,051
$
20,872 $
27,717
December 31,
2023
2022
$
$
550,000 $
(2,692)
547,308 $
550,000
(3,200)
546,800
(1) The estimated fair value of the 2028 Notes, defined below, was approximately $513.1 million and $493.3 million as of December 31,
2023 and 2022, respectively. The fair value estimate is a Level 2 measurement, as defined by FASB ASC Topic 820, Fair Value
Measurements, as it was determined by quotations obtained from a broker-dealer who makes a market in these and similar securities.
Credit Agreements
(in thousands)
ABL Credit Facility
Total Available
Borrowing
Capacity
Amount
Borrowed as of
December 31,
2023
Outstanding
Letters of
Credit
Available
Capacity as of
December 31,
2023
Maturity Date
$
39,008 $
— $
— $
39,008 September 26, 2028
6.125% Senior Secured Notes due June 2028
On June 23, 2021, CVR Partners and Finance Co. (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. 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.
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
December 31, 2023 | 68
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
2025
2026 and thereafter
103.063%
101.531%
100.000%
The 2028 Notes contain customary covenants for a financing of this type that, among other things, restricts CVR Partners’
ability and the ability of certain of its subsidiaries to: (i) sell assets; (ii) pay distributions on, redeem or repurchase the
Partnership’s units or redeem or repurchase its subordinated debt; (iii) make investments; (iv) incur or guarantee additional
indebtedness or issue disqualified stock; (v) create or incur certain liens; (vi) enter into agreements that restrict distributions or
other payments from CVR Partners’ restricted subsidiaries to CVR Partners; (vii) consolidate, merge or transfer all or
substantially all of CVR Partners’ assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.
The 2028 Notes contains 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. 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 2028 Notes to cause
the acceleration of the 2028 Notes, in addition to the pursuit of other available remedies.
ABL Credit Agreement
On September 26, 2023, CVR Partners and certain of its subsidiaries entered into Amendment No. 1 to the Credit
Agreement (the “ABL Amendment”) with Wells Fargo Bank National Association, a national banking association, as the
administrative agent, collateral agent, and lender. The ABL Amendment amended that certain Credit Agreement, dated as of
September 30, 2021 (as amended, the “ABL Credit Facility”), by and among the credit parties thereto and Wells Fargo, as
administrative agent, collateral agent and a lender, to, among other things, (i) increase the aggregate principal amount available
under the credit facility by an additional $15.0 million to a total of $50.0 million in the aggregate, with an incremental facility
of an additional $15.0 million in the aggregate subject to additional lender commitments and certain other conditions, and (ii)
extend the maturity date by an additional four years to September 26, 2028. 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 proceeds of the loans may be used for general corporate purposes of the Partnership and
its subsidiaries. The foregoing description of the ABL Amendment does not purport to be complete and is qualified in its
entirety by its terms, which is furnished as an exhibit to this Report.
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. 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.
Covenant Compliance
The Partnership and its subsidiaries were in compliance with all covenants under their respective debt instruments as of
December 31, 2023.
December 31, 2023 | 69
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(9) Revenue
CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the Partnership’s revenue, disaggregated by major products:
(in thousands)
Ammonia
UAN
Urea products
Net sales, exclusive of freight and other
Freight revenue (1)
Other revenue (2)
Total revenue
Year Ended December 31,
2023
2022
2021
$
161,004 $
199,523 $
431,451
28,730
621,185
42,096
18,196
556,519
33,506
789,548
34,770
11,266
146,140
316,014
28,746
490,900
31,419
10,262
$
681,477 $
835,584 $
532,581
(1) Freight revenue recognized by the Partnership represents the pass-through finished goods delivery costs incurred prior to customer
(2)
acceptance and are reimbursed by customers. An offsetting expense for freight is included in Cost of materials and other.
Includes revenue from (i) nitric acid sales and (ii) carbon oxide sales, including sales made in connection with the 45Q Transaction and
the noncash consideration received, which is recognized as the performance obligation associated with the CO Contract is satisfied over
its term through April 2030. Revenue from the CO Contract is recognized over time based on carbon oxide volumes measured at
delivery.
Remaining Performance Obligations
We have spot and term contracts with customers and the transaction prices are either fixed or based on market indices
(variable consideration). We do not disclose remaining performance obligations for contracts that have terms of one year or less
and for contracts where the variable consideration was entirely allocated to an unsatisfied performance obligation.
As of December 31, 2023, the Partnership had approximately $9.7 million of remaining performance obligations for
contracts with an original expected duration of more than one year. The Partnership expects to recognize $3.4 million of these
performance obligations as revenue by the end of 2024, an additional $3.2 million in 2025, and the remaining balance
thereafter.
Contract Balances
A summary of the deferred revenue activity for the year ended December 31, 2023 is presented below:
(in thousands)
Balance at December 31, 2022
Add:
New prepay contracts entered into during the period
Noncash consideration received as part of the 45Q Transaction
Less:
Revenue recognized that was included in the contract liability balance at the beginning of the period
Revenue recognized related to contracts entered into during the period
Revenue recognized related to noncash consideration
Other changes
Total deferred revenue at December 31, 2023
Less: Current portion of deferred revenue
Total long-term deferred revenue
$
47,516
50,956
46,000
(46,438)
(41,254)
(6,345)
(1,328)
49,107
(15,796)
33,311
$
December 31, 2023 | 70
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Major Customers
CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CVR Partners had two customers that accounted for 10% or more of net sales at approximately 13% and 12% for the year
ended December 31, 2023, and 16% and 14% for the year ended December 31, 2022. CVR Partners had one customer who
comprised 13% of net sales for the year ended December 31, 2021.
(10) Share-Based Compensation
Overview
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. The Partnership had 0.5 million shares available for
future grants under the CVR Partners LTIP at December 31, 2023.
CVR Partners’ Phantom Unit Awards and Compensation Expense
Phantom unit awards that have been granted to officers, employees, and directors (the “Share-Based Awards”) reflect the
value and distributions of CVR Partners, as applicable. 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, subject to the terms of the applicable award agreement. The Share-Based Awards are generally
graded-vesting awards, which vest over three years with one-third of the award vesting each year provided the grantee remains
employed by the Partnership and its subsidiaries on the applicable vesting date. 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 remeasured 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, 2023 is presented below:
(in thousands, except per unit data)
Non-vested at December 31, 2022
Granted
Vested
Forfeited
Weighted-
Average
Grant Date
Fair Value
37.58 $
63.21
24.41
37.71
Units (1)
200,309 $
63,349
(154,569)
(11,219)
Aggregate
Intrinsic
Value
20,147
Non-vested at December 31, 2023
97,870 $
74.95 $
6,410
(1) As of December 31, 2023, 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, 2023 was approximately $5.4
million, which is expected to be recognized over a weighted average period of 1.8 years. Compensation expense recorded for
the years ended December 31, 2023, 2022, and 2021 related to these awards was $6.4 million, $25.7 million, and $27.0 million,
respectively.
As of December 31, 2023 and 2022, the Partnership had a liability of $1.5 million and $9.7 million, respectively, for cash
settled non-vested phantom unit awards and associated distribution equivalent rights and, for the years ended December 31,
2023, 2022, and 2021, paid $12.6 million, $17.7 million, and $11.1 million, respectively, to settle liability-classified awards
upon vesting.
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2023 and 2022, CVR Energy had a liability associated with Share-Based Awards of $0.5 million and
$3.8 million, respectively, for cash settled non-vested phantom unit awards and associated distribution equivalent rights and, for
the years ended December 31, 2023, 2022, and 2021, paid $5.2 million, $7.0 million, and $4.4 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 equivalent rights to certain of its officers and employees and
those of its subsidiaries, including officers and employees of the Partnership’s subsidiaries, who provide shared services for
CVR Energy and its subsidiaries. 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, 2023,
2022, and 2021 related to the incentive units was $3.4 million, $5.3 million and $2.3 million, respectively.
The Partnership had no separate liabilities related to these incentive unit awards as of December 31, 2023 and 2022, as the
allocation of compensation expense for incentive unit awards is part of the amount charged to the Partnership under the
Corporate Master Service Agreement (“Corporate MSA”). For the years ended December 31, 2023, 2022, and 2021, the
Partnership had no reimbursements related to its allocated portion of CVR Energy’s incentive unit awards payments. See Note
12 (“Related Party Transactions”) for further discussion of the Corporate MSA.
Performance Unit Awards
Pursuant to the amended employment agreement, effective December 22, 2021, with the Executive Chairman of our
General Partner, CVR Energy amended the performance award agreement (the “Performance Unit Award Agreement”). The
Performance Unit Award Agreement represents 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 6, 2025 through February
20, 2025 is equal to or greater than $60 per share. Under the Performance Unit Award Agreement, no compensation costs were
recognized for the years ended December 31, 2023 and 2022. For the year ended December 31, 2021, the Partnership
recognized a benefit of $0.6 million. Under the Performance Unit Award Agreement, as of December 31, 2023 and 2022, the
Partnership had no outstanding liability. Once the performance parameters are probable of being met under the Performance
Unit Award Agreement, the Partnership’s allocated portion of unrecognized compensation costs would be approximately $2.0
million.
Other Benefit Plans
CVR Energy sponsors and administers two defined contribution 401(k) plans, the CVR Energy 401(k) Plan and the CVR
Energy 401(k) Plan for Represented Employees (collectively, the “Plans”), in which employees of the general partner, CVR
Partners and its subsidiaries may participate. Participants in the Plans may elect to contribute a designated percentage of their
eligible compensation in accordance with the Plans, subject to statutory limits. CVR Partners provides a matching contribution
of 100% of the first 6% of eligible compensation contributed by participants. Participants in both Plans are immediately vested
in their individual contributions. 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 had contributions under
the Plans of $2.4 million and $2.3 million for the years ended December 31, 2023 and 2022, respectively. The Partnership did
not contribute under the Plans during the year ended December 31, 2021, as the Partnership’s matching contributions for the
Plans were suspended effective January 1, 2021 and resumed effective January 1, 2022.
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(11) Commitments
Unconditional Purchase Obligations
The minimum required payments for unconditional purchase obligations as defined in ASC 440, Commitments, are as
follows:
(in thousands)
Year Ending December 31,
2024
2025
2026
2027
2028
Thereafter
Unconditional
Purchase
Obligations
$
$
3,731
3,723
3,723
3,723
3,723
38,778
57,401
Expenses associated with these obligations are included in Direct operating expenses (exclusive of depreciation and
amortization), and, for the years ended December 31, 2023, 2022, and 2021, totaled $3.7 million, $3.8 million, and $3.9
million, respectively.
(12) Related Party Transactions
Limited Partnership Agreement
The Partnership’s general partner manages the Partnership’s operations and activities as specified in CVR Partners’ limited
partnership agreement. The General Partner is managed by its board of directors. The partnership agreement provides that the
Partnership will reimburse the General Partner for all direct and indirect expenses it incurs or payments it makes on behalf of
the Partnership, including salary, bonus, incentive compensation, and other amounts paid to any person to perform services for
the Partnership or for its general partner in connection with operating the Partnership.
Omnibus Agreement
We are party to an omnibus agreement with CVR Energy and our general partner, pursuant to which we have agreed that
CVR Energy will have a preferential right to acquire any assets or group of assets that do not constitute assets used in a
fertilizer restricted business. In determining whether to exercise any preferential right under the omnibus agreement, CVR
Energy will be permitted to act in its sole discretion, without any fiduciary obligation to us or the unitholders whatsoever. These
obligations will continue so long as CVR Energy owns at least 50% of our general partner. There was no activity reported under
this agreement during the years ended 2023, 2022, and 2021.
Coffeyville MSA
The Coffeyville MSA provides for monthly payments, subject to netting, for all goods and services supplied under the
Coffeyville MSA and is in effect until terminated in writing, in whole or in part, by either party, or until terminated
automatically in the event a party falls out of common control with the other party. The Coffeyville MSA provides the
following services:
•
•
Cross Easements - Both CRNF and the CVR Energy Subsidiary can access and utilize each other’s land in certain
circumstances in order to operate their respective businesses.
Hydrogen Purchase and Sale - The CVR Energy Subsidiary agrees to sell and deliver a committed hydrogen volume
of 90,000 mscf per month to CRNF, and CRNF has the option to purchase excess volume from the CVR Energy
Subsidiary, if available.
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
•
•
•
•
Raw Water and Facilities Sharing - CRNF and the CVR Energy Subsidiary 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.
Pet Coke Supply - The CVR Energy Subsidiary must deliver 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. Our Coffeyville Facility has the option to purchase
any excess of pet coke production at the purchase price provided for in the agreement.
Feedstock and Shared Services - CRNF and the CVR Energy Subsidiary provide feedstock and other services to one
another which are utilized in the respective production processes at each of their respective facilities.
Lease - CRNF leases certain office and laboratory space from the CVR Energy Subsidiary.
Corporate MSA
Under the Corporate MSA, the General Partner and the Partnership and its subsidiaries, as “service recipients” thereunder,
obtain certain management and other administrative and professional services from CVR Services. The Corporate MSA
provides for payment by each service recipient, including the General Partner and the Partnership and its subsidiaries, of a
monthly fee for goods and services supplied thereunder, 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. Any party may terminate the Corporate MSA upon at least
90 days’ notice.
Environmental Agreement
CRNF and certain of CVR Energy’s subsidiaries are parties to an environmental agreement which provides for certain
indemnification and access rights in connection with environmental matters affecting CVR Energy’s Coffeyville refinery and
the Coffeyville Facility. To the extent that liability arises from environmental contamination that is caused by the Coffeyville
refinery but is also commingled with environmental contamination caused by CRNF, the Coffeyville refinery may elect, in its
sole discretion and at its own cost and expense, to perform government mandated environmental activities relating to such
liability, subject to certain conditions and provided that it does not waive any rights to indemnification or compensation
otherwise provided for in the agreement. No liability under this agreement was recorded as of December 31, 2023 and 2022.
Terminal and Operating Agreement
CRNF entered into a lease and operating agreement with an affiliated CVR Energy subsidiary, under which it leases the
premises located at Phillipsburg, Kansas to be utilized as a UAN terminal. The initial term of the agreement will expire in May
2032, provided, however, CRNF may terminate the lease at any time during the initial term by providing 180 days prior written
notice. In addition, this agreement will automatically renew for successive five-year terms, provided that CRNF may terminate
the agreement during any renewal term with at least 180 days written notice. Under the terms of this agreement, CRNF will pay
$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.
December 31, 2023 | 74
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Related Party Activity
CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Activity associated with the Partnership’s related party arrangements for the years ended December 31, 2023, 2022, and
2021 is summarized below:
(in thousands)
Sales to related parties: (1)
CVR Energy subsidiary
CVRP JV
Expenses from related parties: (2)
CVR Energy subsidiary
CVR Services
Due to related parties (3)
Year Ended December 31,
2023
2022
2021
$
4 $
3,613
312 $
—
21,336
28,505
24,149
32,278
308
—
17,293
24,424
December 31,
2023
2022
$
4,341 $
4,518
(1) Sales to related parties, included in Net sales in our consolidated financial statements, consist of (a) sales of feedstocks and services
under the Coffeyville MSA and (b) CO sales to CVRP JV and its subsidiaries.
(2) Expenses from related parties, included in Cost of materials and other, Direct operating expenses (exclusive of depreciation and
amortization), and Selling, general and administrative expenses in our consolidated financial statements, consist primarily of purchases
of pet coke and hydrogen under the Coffeyville MSA and management and other professional services from CVR Services under the
Corporate MSA.
(3) Due to related parties, included in Accounts payable to affiliates, consists primarily of amounts payable to CVR Energy subsidiaries
under the Coffeyville MSA and Corporate MSA.
Distributions to CVR Partners’ Unitholders
The Board has a policy for the Partnership to distribute all available cash, as determined by the Board in its sole discretion,
generated on a quarterly basis. Cash distributions are made to the common unitholders of record on the applicable record date,
generally within 60 days after the end of each quarter. Available Cash for Distribution for each quarter is determined by the
Board following the end of such quarter.
Distributions, if any, including the payment, amount, and timing thereof, and the Board’s distribution policy, including the
definition of Available Cash for Distribution, are subject to change at the discretion of the Board. The following tables present
quarterly distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, as of
December 31, 2023 and 2022 (amounts presented in table below may not add to totals presented due to rounding):
Related Period
Date Paid
Quarterly Distributions
Per Common Unit
Public
Unitholders
CVR Energy
Total
Quarterly Distributions Paid (in thousands)
March 13, 2023
$
10.50 $
70,115 $
40,866 $
2022 - 4th Quarter
2023 - 1st Quarter
May 22, 2023
2023 - 2nd Quarter
August 21, 2023
2023 - 3rd Quarter
November 20, 2023
10.43
4.14
1.55
69,647
27,646
10,350
40,594
16,113
6,033
110,981
110,241
43,759
16,383
Total 2023 quarterly distributions
$
26.62 $
177,759 $
103,605 $
281,364
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CVR PARTNERS, LP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Related Period
Date Paid
Quarterly Distributions
Per Common Unit
Public
Unitholders
CVR Energy
Total
Quarterly Distributions Paid (in thousands)
March 14, 2022
$
5.24 $
35,576 $
20,394 $
2021 - 4th Quarter
2022 - 1st Quarter
May 23, 2022
2022 - 2nd Quarter
August 22, 2022
2022 - 3rd Quarter
November 21, 2022
2.26
10.05
1.77
15,091
67,109
11,819
8,796
39,115
6,889
55,970
23,887
106,225
18,708
Total 2022 quarterly distributions
$
19.32 $
129,597 $
75,193 $
204,790
Related Period
Date Paid
2021 - 2nd Quarter
August 23, 2021
2021 - 3rd Quarter
November 22, 2021
Total 2021 quarterly distributions
$
$
Quarterly Distributions
Per Common Unit
Public
Unitholders
CVR Energy
Total
Quarterly Distributions Paid (in thousands)
1.72 $
11,678 $
6,694 $
2.93
19,893
11,404
4.65 $
31,571 $
18,098 $
18,372
31,297
49,669
There were no quarterly distributions declared or paid by the Partnership related to the first quarter of 2021 and the fourth
quarter of 2020.
For the fourth quarter of 2023, the Partnership, upon approval by the Board on February 20, 2024, declared a distribution
of $1.68 per common unit, or $17.8 million, which is payable March 11, 2024 to unitholders of record as of March 4, 2024. Of
this amount, CVR Energy will receive approximately $6.5 million, with the remaining amount payable to public unitholders.
(13) Supplemental Cash Flow Information
Cash flows related to income taxes, interest, leases, and capital expenditures and deferred financing costs included in
accounts payable are as follows:
(in thousands)
Supplemental disclosures:
Cash paid for income taxes, net of refunds
Cash paid for interest
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Noncash investing and financing activities:
Change in capital expenditures included in accounts payable
Change in deferred financing costs included in accounts payable
Year Ended December 31,
2023
2022
2021
$
281 $
110 $
34,083
35,164
27
51,369
3,786
3,474
3,652
—
—
4,885
—
—
—
(3,222)
—
2
96
5,092
675
December 31, 2023 | 76
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
The Partnership has evaluated, under the direction and with the participation of the Executive Chairman, Chief Executive
Officer, and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as defined in Exchange Act
Rule 13a-15(e) and 15d-15(e). Based upon this evaluation, the Partnership’s Executive Chairman, Chief Executive Officer, and
Chief Financial Officer concluded that disclosure controls and procedures were effective as of December 31, 2023.
Management’s Report on Internal Control Over Financial Reporting.
The Partnership’s management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate. Under the supervision and with the participation of management, we conducted an
evaluation of the effectiveness of its internal control over financial reporting based on the framework in the 2013 Internal
Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). Based on that evaluation, the Partnership’s Executive Chairman, Chief Executive Officer, Chief Financial Officer,
and Chief Accounting Officer have concluded that internal control over financial reporting was effective as of December 31,
2023. The Partnership’s independent registered public accounting firm, that audited the consolidated financial statements
included herein under Part II, Item 8 of this Report, has issued a report on the effectiveness of the Partnership’s internal control
over financial reporting. This report can be found under Part II, Item 8 of this Report.
Changes in Internal Control Over Financial Reporting.
There have been no material changes in the Partnership’s internal control over financial reporting required by Rule 13a-15
of the Exchange Act that occurred during the fiscal quarter ended December 31, 2023 that materially affected, or are reasonably
likely to materially affect, the Partnership’s internal control over financial reporting.
Item 9B. Other Information
On February 16, 2024, the Compensation Committee of the Board adopted the CVR Partners, LP 2024 Performance Based
Bonus Plan - Fertilizer (the “2024 UAN Plan”), which applies to all eligible employees of our subsidiaries and contains terms
substantially equivalent to the CVR Partners, LP 2023 Performance Based Bonus Plan - Fertilizer subject to adjustments to the
reliability and operating expense measures, and an update for the peer group for the ROCE measure. The 2024 UAN Plan will
be filed with the Partnership’s Quarterly Report on Form 10-Q for the period ending March 31, 2024.
During the three months ended December 31, 2023, no director or officer of the General Partner adopted or terminated a
“Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of
Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
December 31, 2023 | 77
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Item 10. Directors, Executive Officers and Corporate Governance
Management of CVR Partners, LP
PART III
As a publicly traded partnership, we are managed by our general partner, CVR GP, LLC (“General Partner”), either
directly by its board of directors (the “Board”), by the General Partner’s executive officers (who are appointed by the Board) or
by our General Partner’s sole member, CVR Services, LLC (“CVR Services”) an indirect wholly owned subsidiary of CVR
Energy, Inc. (“CVR Energy”), subject to the terms and conditions specified in our partnership agreement. Limited partners are
not entitled to directly or indirectly participate in our management or operations. Neither our General Partner nor the members
of its Board are elected by our unitholders, and none are subject to re-election on a regular basis in the future.
Actions by our General Partner that are made in its individual capacity are made by CVR Services as the sole member of
our General Partner and not by the Board. Our partnership agreement contains various provisions which replace default
fiduciary duties with more limited contractual corporate governance standards. Whenever our General Partner makes a
determination or takes or declines to take an action in its individual, rather than representative, capacity, it is entitled to make
such determination or to take or decline to take such action free of any fiduciary duty or obligation whatsoever to us, any
limited partner or assignee, and it is not required to act in good faith or pursuant to any other standard imposed by our
partnership agreement or under Delaware law or any other law. Examples include the exercise or assignment of its call right or
its registration rights, its voting rights with respect to the units it owns and its determination whether or not to consent to any
merger or consolidation of the Partnership. Our General Partner is liable, as a General Partner, for all of our debts (to the extent
not paid from our assets), except for indebtedness or other obligations that are made expressly non-recourse to it. Our debt
instruments are non-recourse to our General Partner. Our General Partner therefore may cause us to incur indebtedness or other
obligations that are non-recourse to it.
The Board
As of December 31, 2023, the Board consisted of three directors affirmatively determined by the Board to be independent,
non-employee directors (Donna R. Ecton, Frank M. Muller, Jr. and Peter K. Shea); one non-management director who was an
officer of Icahn Enterprises L.P. (“IEP”) until April 2023 (Jordan Bleznick); as well as two directors who are executive officers
of our General Partner (David L. Lamp, our Executive Chairman, and Mark A. Pytosh, our President and Chief Executive
Officer). David Willetts, who is an officer and employee of IEP, also served as a non-management director during 2023 until
his resignation on March 17, 2023. The Board is led by its Chairman of the Board, Mr. Bleznick. As required by our Corporate
Governance Guidelines, the Board oversees the business of the Partnership, including its fundamental financial and business
strategies and major corporate actions, significant risks facing the Partnership and its risk management activities, and the
Partnership’s Environmental, Social and Governance (“ESG”) initiatives. The Board also periodically evaluates its
composition, including the skill sets, diversity, leadership structure, background and experience of its directors. The Board
believes its current structure and composition is best for the Partnership and its unitholders at this time. All actions of the
Board, other than any matters delegated to a committee, will require approval by majority vote of the directors, with each
director having one vote. The directors of our General Partner hold office until the earlier of their death, resignation or removal.
Board Meetings, Attendance and Executive Sessions
In 2023, the Board met four times and acted three times by written consent. Each of the directors who served during 2023
attended 100% of the meetings of the Board and committees on which he or she served during their respective tenure.
To promote open discussion among non-management and independent directors, we schedule regular executive sessions in
which our non-management directors meet without management participation, as well as when our independent directors meet
without management or any directors affiliated with IEP. Our non-management and independent directors met during five and
nine executive sessions, respectively, in 2023. Ms. Ecton presided over the executive sessions held by our non-management and
independent directors.
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The following table set forth the names, positions, ages, and a description of the backgrounds, experience, and
qualifications of our directors,1 as of February 20, 2024:
Jordan Bleznick
Director, Chairman of the Board
Age: 68
Director since: 2023
Key Skills and Expertise:
ü Public Company
ü Executive Leadership
ü Finance & Accounting
ü Legal/Regulatory/Compliance
ü Human Resources/Executive Compensation
Board Committees:
Compensation
Special
Career Highlights:
❖ Vice President/Taxes and Chief Tax Counsel (2002-2023) of various affiliates of Carl C. Icahn
❖ Twenty-two year career as attorney in private practice (1980-2002), including as a partner at
DLA Piper and Gordon Altman Weitzen Shalov and Wein
Other Public Company Directorships (current): Enzon Pharmaceuticals, Inc. (since 2020)
Education: University of Cincinnati, B.A. Economics; Ohio State University College of Law,
J.D.; New York University School of Law, L.L.M. Taxation
David L. Lamp
Director, Executive Chairman
Age: 66
Director since: 2018
Key Skills and Expertise:
ü Public Company
ü Executive Leadership
ü Legal/Regulatory/Compliance
ü Human Resources/Executive Compensation
ü Risk Management
ü Industry/Operations
ü ESG/Sustainability/EH&S
Board Committees:
Special
Career Highlights:
❖ CVR Partners, LP, Executive Chairman (2017 to current) and former Chairman of the Board
(2018-2023)
❖ CVR Energy, Inc., President & CEO (2017 to current)
❖ Over 40-years of technical, commercial and operational experience in the refining and
chemical industries, including with Western Refining, Inc. (“WNR”), Northern Tier Energy
LP (“NTI”), and HollyFrontier Corporation
Other Public Company Directorships (current): CVR Energy, Inc. (since 2018)
Other Public Company Directorships (within past 5 years): CVR Refining, LP (2018-2019)
Education: Michigan State University, B.S. Chemical Engineering
1 Each of CVR Energy, CVR Refining, LP, IEP, Viskase Companies, Inc. and Voltari Corporation are indirectly controlled by Mr. Carl Icahn.
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Mark A. Pytosh
Director, President & Chief Executive Officer
Age: 59
Director since: 2011
Key Skills and Expertise:
ü Public Company
ü Executive Leadership
ü Finance & Accounting
ü Legal/Regulatory/Compliance
ü Human Resources/Executive Compensation
ü Risk Management
ü Industry/Operations
ü IT/Cybersecurity
ü ESG/Sustainability/EH&S
Board Committees:
Environmental, Health &
Safety
Donna R. Ecton
Director
Age: 76
Director since: 2008
Board Committees:
Audit, Chair
Conflicts, Chair
Environmental, Health &
Safety
Career Highlights:
❖ CVR Partners, President & CEO (2014 to current)
❖ CVR Energy, Inc., Executive Vice President (2018 to current)
❖ Over 30-years of service in senior executive roles, including as chief financial officer, in the
fertilizer, petroleum refining, environmental, power, solid waste and investment banking
industries
Other Professional Experience and Community Involvement: Director, Fertilizer Institute
(since 2015); Director, University of Illinois Foundation (since 2007); Former CFO, Tervita
Corp.; Former SVP & CFO, Covanta Energy Corp.; Former SVP & CFO, Waste Services, Inc.
Education: University of Illinois, Urbana-Champaign, B.S. Chemistry
Key Skills and Expertise:
ü Public Company
ü Executive Leadership
ü Finance & Accounting
ü Legal/Regulatory/Compliance
ü Human Resources/Executive Compensation
ü Risk Management
ü ESG/Sustainability/EH&S
Career Highlights:
❖ EEI Inc., Chairman and CEO (1998 to current)
❖ Over 35-years of service in executive leadership and director roles for public and privately
held companies in banking & other industries, as well as for non-profits
Other Public Company Directorships (within past five years): KAR Auction Services, Inc.
(2013-2019)
Other Professional Experience and Community Involvement: Trustee, Board of Trustees,
Hillsdale College; Member, Business Advisory Council, Carnegie Mellon Graduate School
of Industrial Administration; Overseer, Harvard Board of Overseers; Member and President,
Harvard Business School, Executive Council
Education: Wellesley College, B.A. Economics, Durant Scholar; Harvard Graduate School of
Business Administration, MBA
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Frank M. Muller, Jr.
Director
Age: 81
Director since: 2008
Board Committees:
Audit
Compensation, Chair
Environmental, Health &
Safety
Peter K. Shea
Director
Age: 72
Director since: 2014
Board Committees:
Audit
Environmental, Health &
Safety, Chair
Key Skills and Expertise:
ü Public Company
ü Executive Leadership
ü Finance & Accounting
ü Human Resources/Executive Compensation
ü Risk Management
ü Industry/Operations
ü IT/Cybersecurity
ü ESG/Sustainability/EH&S
Career Highlights:
❖ Toby Enterprises, President (1999 to current)
❖ TenX Technology, Inc., Former Chairman and CEO (1985-2009)
❖ Over 40-years of experience in senior executive roles in the technology, energy and petroleum,
chemical, and other industries
Other Professional Experience and Community Involvement: Expertise in business
acquisitions and joint ventures; Served in the United States Army; Former Chairman, Topaz
Technologies, LTD. (until 2018)
Education: Texas A&M University, B.S.; Texas A&M University, MBA
Key Skills and Expertise:
ü Public Company
ü Executive Leadership
ü Finance & Accounting
ü Risk Management
ü ESG/Sustainability/EH&S
Career Highlights:
❖ Snow Phipps, Operating Partner (2013-2021)
❖ Over 30-years of experience in executive Management roles in the food manufacturing and
packaging and other industries
Other Public Company Directorships (current): Viskase Companies, Inc. (since 2006)
Other Public Company Directorships (within past five years): Hennessy Capital IV
(2019-2020); Voltari Corporation (2015-2019)
Other Professional Experience and Community Involvement: Former Director, DecoPac, Inc.;
Former Chairman & Director, FeraDyne Outdoors, LLC; Former Chairman & Director, Teasdale
Foods, Inc.
Education: Iona College, B.B.A.; University of Southern California, MBA
Director Independence & Controlled Company Exemptions
To be considered independent under the New York Stock Exchange (the “NYSE”) listing standards, the Board must
determine that a director has no material relationship with us other than as a director. The standards specify the criteria by
which the independence of directors will be determined, including guidelines for directors and their immediate family members
with respect to employment or affiliation with us or with our independent public accountants. The Board has affirmatively
determined that each of Ms. Ecton and Messrs. Muller and Shea meet the independence standards established by the NYSE and
December 31, 2023 | 81
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the Exchange Act for membership on an audit committee and are non-employee directors, as defined by the rules and
regulations of the NYSE, the Securities and Exchange Commission (the “SEC”), and our Corporate Governance Guidelines.
As a publicly traded partnership, we qualify for, and rely on, certain exemptions from the NYSE’s corporate governance
requirements, including the following:
•
•
•
A majority of our directors are not required to be (and are not) independent;
Our Board has not and does not currently intend to establish a nominating/corporate governance committee; and
The Compensation Committee of the Board does not need to be (and is not) composed entirely of independent
directors.
As a result, unitholders do not have the same protections afforded to equity holders of companies that are subject to all of
the corporate governance requirements of the NYSE.
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Board Committees
Our Board has five standing committees appointed by the Board: the Audit Committee; the Compensation Committee; the
Environmental Health & Safety (“EH&S”) Committee; the Conflicts Committee; and the Special Committee. Any standing
committee with a written charter reviews the adequacy of such charter, at least annually, in addition to evaluating its
performance and reporting to the Board on such evaluation. These charters are available free of charge on our website at
www.CVRPartners.com or in print without charge to any unitholder requesting them by sending a written request to our
Secretary at the address listed under “Communications with Directors” below.
Audit Committee
Members:
Donna R. Ecton, Chair (1) (3)
Frank M. Muller, Jr. (2) (3)
Peter K. Shea (2) (3)
Meetings in 2023: 4
Primary Responsibilities:
Ø Appoints, compensates, oversees and evaluates the performance of the
independent auditors, including approval of all services to be performed by and the
independence of the independent auditor.
Ø Reviews with management, our internal auditors and independent auditors the
adequacy, quality and integrity of the Partnership’s internal controls, the fair
presentation and accuracy of the Partnership’s financial statements and disclosures,
audit reports and management’s responses thereto, and the Partnership’s critical
accounting policies and practices.
Ø Oversees and evaluates the performance, responsibilities, engagement plan,
budget and staffing of the internal audit function including its senior audit executive.
Ø Establishes procedures for and oversees handling of complaints regarding
accounting, internal accounting controls or auditing matters and the confidential
submission of concerns regarding questionable accounting or auditing matters.
Ø Monitors and periodically reviews the Partnership’s compliance with applicable
laws, major litigation, regulatory compliance, risk management, insurance coverage
and any policies, practices or mitigation activities relating thereto.
Ø Reviews and discusses with management potential significant risks to the
Partnership and risk mitigation efforts.
Ø Reviews the Partnership’s information technology systems and associated risks
and controls relating to business continuity, data privacy and cybersecurity, and
contingency plans in the event of a failure of such systems.
Ø Assists the Board in its oversight of the governance portions of the Partnership’s
ESG initiatives including the Partnership’s governance practices and reputation, Code
of Ethics and Business Conduct, anti-bribery and anti-corruption programs and of the
overall risks relating to such ESG initiatives.
Ø Reviews and discusses with management and Grant Thornton LLP, our
independent registered accounting firm (“Grant Thornton”), the audited financial
statements contained in this Annual Report on Form 10-K.
Ø Received written disclosures and the letter from Grant Thornton required by
applicable requirements of the Public Company Accounting Oversight Board.
(1) Audit Committee Financial Expert
(2) Financially Literate
(3) Independent, Non-Employee
Director
Ø Based on the reviews and discussions referred to above, recommended to the
Board that the audited financial statements be included in this Annual Report on Form
10-K, for filing with the SEC.
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Compensation Committee
Members:
Frank M. Muller, Jr., Chair (3)
Jordan Bleznick
Meetings in 2023: 2
(3) Independent, Non-Employee
Director
EH&S Committee
Members:
Peter K. Shea, Chair (3)
Donna R. Ecton (3)
Frank M. Muller, Jr. (3)
Mark A. Pytosh
Meetings in 2023: 2
(3) Independent, Non-Employee
Director
Ø Reviews, amends, modifies, adopts and oversees the incentive compensation
plans, equity-based compensation plans, qualified retirement plans, health and welfare
plans, deferred compensation plans, and any other benefit plans, programs or
arrangements sponsored or maintained by the Partnership or its general partner.
Ø Evaluates the performance of our executive officers and, in connection therewith,
reviews and determines, or recommends to the Board, the annual salary, bonus, equity-
based compensation, and other compensation, incentives and benefits of our executive
officers (other than compensation and benefits provided by one of its affiliates).
Ø Reviews and approves any employment, consulting, change in control, severance
or termination, or other compensation agreements or arrangements with our executive
officers.
Ø Reviews and makes recommendations to the Board with respect to the
compensation of non-employee directors or any plans or programs relating thereto.
Ø Reviews and discusses
the
Compensation Discussion and Analysis and recommends to the Board their inclusion
in the Partnership’s Annual Reports on Form 10-K.
the Compensation Committee Report and
Ø Assists the Board in assessing any risks to the Partnership associated with
compensation practices and policies.
Ø Assists the Board in its oversight of the social portions of the Partnership’s ESG
initiatives including diversity, inclusion and human rights strategies, commitments,
and reporting.
Ø Oversees and administers the Partnership’s Policy for the Recovery of
Erroneously Awarded Compensation.
Ø Based on the reviews and discussions referred to above, recommended to the
Board that the Compensation Discussion and Analysis, the Compensation Committee
Report, and other disclosures relating to the Compensation Committee be included in
this Annual Report on Form 10-K.
Ø Oversees the establishment and administration of environmental, health and safety
policies, programs, procedures, and initiatives.
Ø Assists the Board in its oversight of risk relating to environmental, health, safety,
and security matters.
Ø Assists the Board in its oversight of the environmental, health, safety, and security
portions of
the Partnership’s
environmental, health, safety and security risks, opportunities, policies and reporting,
including those related to climate change and sustainability.
the Partnership’s ESG
initiatives
including
December 31, 2023 | 84
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Conflicts Committee
Members:
Donna R. Ecton, Chair (3)
Frank M. Muller, Jr. (3)
Ø As requested by the Board, investigates, reviews, evaluates and acts upon any
potential conflicts of interest between our general partner or its affiliates, on the one
hand, and us or any public unitholder, on the other, the approvals of which (if any) are
conclusively deemed to be fair and reasonable to the Partnership and its common
unitholders.
Ø As requested by the Board, determines whether the resolution of a conflict of
interest is in the best interests of the Partnership.
Ø Carries out any other duties delegated by the Board that relate to potential
conflicts of interest.
Ø Has the sole authority to retain, compensate, direct, oversee, and terminate any
counsel or other advisers, including consultants, attorneys, independent accountants
and other service providers, to assist in the evaluation of conflicts matters and to
approve such consultants’ fees and other retention terms.
(3) Independent, Non-Employee
Director
Ø Approvals are conclusively deemed to be fair and reasonable to the Partnership,
approved by all of the Partnership’s partners and not a breach by the general partner of
any duties it may owe us or our unitholders.
Special Committee
Members:
Jordan Bleznick
David L. Lamp
Ø Evaluates and approves matters arising during the intervals between meetings of
the Board that did not warrant convening a special meeting of the Board but should
not be postponed until the next scheduled meeting of that Board.
Acted by Written Consent in 2023: 1
Ø Exercises approval authority delegated to it by the Board.
Communications with Directors
Unitholders and other interested parties wishing to communicate with the Board may send a written communication
addressed to:
CVR Partners, LP
2277 Plaza Drive, Suite 500
Sugar Land, Texas 77479
Attention: Executive Vice President, General Counsel and Secretary
Our General Counsel will forward all appropriate communications directly to the Board or to any individual director or
directors, depending upon the facts and circumstances outlined in the communication. Any unitholder or other interested party
who is interested in contacting only the independent directors or non-management directors as a group or the director who
presides over the meetings of the independent directors or non-management directors may also send written communications to
the contact above and should state for whom the communication is intended.
Compensation Committee Interlocks and Insider Participation
As of December 31, 2023, the Compensation Committee was comprised of Messrs. Muller and Bleznick. Until his
resignation from the Board and its committees on March 17, 2023, Mr. Willetts also served on the Compensation Committee.
None of the members of the Compensation Committee during 2023 have, at any time, been an officer or employee of the
Partnership or our General Partner and none have any relationship requiring disclosure under Item 404 of Regulation S-K under
the Exchange Act. No interlocking relationship exists between the Board or Compensation Committee and the board of
directors or compensation committee of any other company.
December 31, 2023 | 85
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Corporate Governance Guidelines and Codes of Ethics
Our Corporate Governance Guidelines, as well as our Code of Ethics and Business Conduct, which applies to all of our
directors, officers, and employees (and which includes additional provisions that apply to our principal executive officer,
principal financial officer, principal accounting officer, and other persons performing similar functions) are available free of
charge on our website at www.CVRPartners.com. These documents are also available in print without charge to any unitholder
requesting them. We intend to disclose any changes in or waivers from our Code of Ethics and Business Conduct by posting
such information on our website or by filing a Form 8-K with the SEC.
Executive Officers
While the Board provides high-level strategy and guidance for the Partnership, our day-to-day activities are carried out by
the executive officers of our General Partner, who are appointed by the Board and act within the authorities granted by the
Board and our organizational documents, including those of the General Partner. Limited partners are not entitled to appoint the
executive officers or directly or indirectly participate in our management or operations. In this Annual Report on Form 10-K (this
“Report”), we refer to the executive officers of our General Partner as “our executive officers.” The following table sets forth
the names, positions, ages, background, experience and qualifications (as of February 20, 2024) of the executive officers of our
General Partner, other than Messrs. Lamp and Pytosh, who are listed under “The Board” above.
Name, Position and Age
Dane J. Neumann
Age: 39
Executive Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary (since October
2021)
Principal Occupation, Experience and Qualifications
Mr. Neumann has served as the Executive Vice President and Chief Financial
Officer and as the Treasurer of our General Partner, and in those same roles for our
affiliate, CVR Energy since October 2021 and February 2022, respectively. Mr.
Neumann most recently served as Interim Chief Financial Officer of our General
Partner from August to October 2021, and as Vice President – Finance & Treasurer
of our General Partner from June 2020 to October 2021, and in those same roles for
CVR Energy. Prior to that, he served in various other roles within our finance
organization since June 2018, including Vice President of Financial Planning &
Analysis and Director of Projects & Controls. Mr. Neumann has nearly 15 years of
experience in the refining and petrochemicals industry in areas relating to finance,
accounting, business development, planning and analytics. Before joining CVR
Partners, Mr. Neumann served in various roles of increasing responsibility for
several formerly publicly traded refining and marketing entities, including with
Andeavor (formerly Tesoro Corporation) and its affiliates from March 2011 until
June 2018, including as director of commercial business planning and analytics
from June 2017 until June 2018, and with WNR and certain of its affiliates and
NTI. Mr. Neumann obtained a Bachelor of Science in Finance and Political Science
and a Master of Business Administration from the University of Minnesota and is a
Certified Public Accountant.
December 31, 2023 | 86
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Name, Position and Age
Melissa M. Buhrig
Age: 48
Executive Vice President,
General Counsel and Secretary
(since July 2018)
Jeffrey D. Conaway
Age: 49
Vice President, Chief Accounting
Officer & Corporate Controller (since
August 2021)
Item 11. Executive Compensation
Compensation Discussion and Analysis
Principal Occupation, Experience and Qualifications
Ms. Buhrig has served as the Executive Vice President, General Counsel and
Secretary of our General Partner, and in those same roles for our affiliate, CVR
Energy, since July 2018. Prior to joining CVR Partners, Ms. Buhrig served as
executive vice president, general counsel, secretary and compliance officer of Delek
US Holdings, Inc. and the general partner of Delek Logistics Partners, LP from
October 2017 until June 2018 and prior thereto served in various senior executive
roles and as compliance officer for WNR. Ms. Buhrig has nearly 24 years of legal
and industry experience including in the areas of mergers and acquisitions,
corporate governance, securities, compliance, litigation, regulatory matters, and
human resources. Ms. Buhrig received a Bachelor of Arts in Political Science from
the University of Michigan and a Juris Doctorate with honors from the University
of Miami School of Law.
Mr. Conaway has served as the Vice President, Chief Accounting Officer &
Corporate Controller of our General Partner, and in that same role for our affiliate,
CVR Energy, since August 2021. Prior to assuming those roles, Mr. Conaway
served as our Director – Commercial & Operations Accounting, since August 2020.
Mr. Conaway has nearly 25 years of experience in finance, accounting and auditing
services. Before joining CVR Partners, Mr. Conaway served as assistant controller
of Patterson-UTI Energy, Inc., an oilfield services company, since February 2019
and in various roles of increasing responsibility at CITGO Petroleum Corporation, a
refiner, transporter and marketer of motor fuels, lubricants, and petrochemicals,
since August 2010, including as senior advisor from November 2017 to February
2019. Mr. Conaway obtained a Bachelor of Business Administration with a
concentration in Accounting and a Master of Business Administration from Angelo
State University and is a Certified Public Accountant.
The following discussion and analysis of compensation arrangements (the “CD&A”) of our named executive officers
(defined below) for 2023 should be read together with the compensation tables and related disclosures set forth below. This
CD&A may contain forward looking statements that are based on our current plans, considerations, expectations, and
determinations regarding future compensation actions, and the future compensation of our named executive officers may differ
from the currently planned programs and payouts summarized in this discussion. This CD&A provides unitholders with an
understanding of our compensation philosophy, objectives, policies, and practices in place during 2023, as well as the factors
considered by our Compensation Committee in making compensation decisions for 2023.
Named Executive Officers
For 2023, our named executive officers were our principal executive officers, our chief financial officer, and our next two
other most highly compensated executive officers:
David L. Lamp
Executive Chairman
Mark A. Pytosh
President and Chief Executive Officer
Dane J. Neumann
Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary
Melissa M. Buhrig
Executive Vice President, General Counsel and Secretary
Jeffrey D. Conaway
Vice President, Chief Accounting Officer and Corporate Controller
Neither the Partnership nor our General Partner directly employ or directly compensate our named executive officers. All
of our named executive officers are employed by CVR Services, and all of our named executive officers divide their time
between working for us and working for CVR Energy and its other subsidiaries.
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The approximate weighted-average percentages of the amount of time that the named executive officers dedicated to the
management of our business in 2023 were as follows: David L. Lamp (10%); Mark A. Pytosh (60%); Dane J. Neumann (18%);
Melissa M. Buhrig (20%); and Jeffrey D. Conaway (20%). These numbers are weighted because the named executive officers
may spend a different percentage of their time dedicated to our business each quarter. The remainder of their time, if any, was
spent working for CVR Energy and its other subsidiaries.
Our named executive officers provide services to us under a Corporate Master Service Agreement, as amended (the
“Corporate MSA”), between us and certain of our subsidiaries, and CVR Services and certain of its affiliates and was approved
by the Conflicts Committee of the Board. Under the Corporate MSA:
•
CVR Services makes available to our General Partner the services of certain CVR Energy executive officers and
employees, some of whom serve as named executive officers of our General Partner;
• We, our General Partner, and our subsidiaries, as the case may be, are obligated to reimburse CVR Services for any
portion of the costs that CVR Services incurs in providing compensation and benefits, payouts under performance-
based bonus plans, and incentive and performance unit payouts to such CVR Energy executive officers and employees
while they are providing services to us under the Corporate MSA, some of whom serve as named executive officers of
our General Partner; and
• We pay CVR Services 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 by CVR Services on behalf of the Partnership or
its subsidiaries without markup.
For more information on the Corporate MSA, see Part II, Item 8, Note 12 (“Related Party Transactions”) and Part III, Item
13 of this Report.
Compensation Philosophy, Objectives and Processes
Our Compensation Committee approves compensation only for Mr. Pytosh (other than 40% of his base salary and annual
performance-based bonus and equity-based incentives attributable to his service for CVR Energy and its subsidiaries, which are
set by the compensation committee of the board of directors of CVR Energy (the “CVI Compensation Committee”)). Although
our Compensation Committee generally engages in discussions with the CVI Compensation Committee regarding
compensation for our named executive officers and the performance of such named executive officers, it does not determine
any part of the compensation of those named executive officers, other than Mr. Pytosh, and has no control over and does not
establish or direct the compensation policies or practices of CVR Energy. Accordingly, while the compensation philosophies,
objectives, and processes described below are generally applicable to both the Partnership and CVR Energy, the remainder of
this CD&A discusses CVR Partners’ compensation programs in which references to our named executive officers refer solely
to Mr. Pytosh, except where otherwise indicated.
In establishing named executive officer compensation, our Compensation Committee (and the CVI Compensation
Committee) generally seeks to:
•
•
•
Incentivize important business priorities such as safety, reliability, environmental performance and earnings growth
through variable compensation earned based on the achievement of related performance goals;
Align the named executive officers’ interests with those of our unitholders and stakeholders, including providing long-
term economic benefits to the unitholders;
Provide competitive financial incentives in the form of salary, bonuses and benefits with the goal of retaining and
attracting talented and highly motivated executive officers; and
• Maintain a compensation program whereby the named executive officers, through exceptional performance and
equity-based incentive awards, have the opportunity to realize economic rewards commensurate with appropriate gains
of other unitholders and stakeholders.
The Compensation Committee takes these main objectives into consideration when creating its compensation programs,
setting each element of compensation under those programs, and determining the proper mix of the various compensation
elements. Named executive officer compensation will generally include a mix of fixed elements, intended to provide stability,
as well as variable elements, which align pay and performance, incentivizing and rewarding our named executive officers in
years where the Partnership achieves superior results.
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The Compensation Committee also considers, among other factors, the success and performance of the Partnership, the
contributions of named executive officers to such success and performance, and the current economic conditions and industry
environment in which the Partnership operates. From time to time, the Compensation Committee may utilize various tools in
evaluating and establishing named executive officer compensation, including their own common sense, knowledge and
experience, as well as some or all of the following:
•
Input from Board members or management. The Compensation Committee may from time to time ask that certain
members of the Board and/or management provide insight into the named executive officers’ roles and responsibilities,
job performance, the Partnership’s performance generally and among the industry, and such other information as may
be requested by the Compensation Committee, including recommendations relating to named executive officer
compensation.
• Market data and peer comparisons. The Compensation Committee may utilize market data that describes common
executive pay practices and the executive pay practices of industry companies, which may be supplemented with
broad-based compensation survey data, survey data from the fertilizer, energy, refining and chemical industries that
influence the competitive market for executive talent and/or from companies comparable to the Partnership in terms of
size and scale.
•
The analysis, judgment and expertise of an independent compensation consultant. The Compensation Committee may
engage an independent outside compensation consultant periodically to provide a comprehensive analysis and
recommendations regarding named executive officer compensation, although a compensation consultant was not
engaged in 2023.
Compensation Risk Assessment
Our Compensation Committee periodically evaluates and considers risks related to our compensation policies and practices
and those of CVR Energy as generally applicable to employees, including our named executive officers. Our Compensation
Committee believes that neither our policies and practices nor the policies and practices of CVR Energy encourage excessive or
unnecessary risk-taking, and are not reasonably likely to have a material adverse effect on us. In reaching this conclusion, our
Compensation Committee reviewed and discussed the design features, characteristics, and performance metrics of our
compensation programs and approval mechanisms for compensation and believes the following factors, among others, mitigate
any potential risks associated with our and CVR Energy’s compensation policies and practices:
•
•
•
Our compensation policies and practices are centrally designed and administered;
Our compensation is balanced among (i) fixed components such as salary and benefits, (ii) variable incentives tied to a
mix of financial and operational performance, and (iii) variable long-term incentives;
The Compensation Committee has discretion to adjust performance-based awards when appropriate based on our
interests and the interests of our unitholders; and
• We have a Policy for the Recovery of Erroneously Awarded Compensation providing for the recovery or “clawback”
of certain compensation awarded to our executive officers, and certain elements of our compensation programs also
contain claw-back provisions.
Compensation Process for 2023
In setting named executive officer compensation for 2023, the Compensation Committee considered the philosophies and
objectives described above, utilized its members’ knowledge, experience, and judgment in assessing reasonable compensation
and ensuring compensation levels remain competitive in the marketplace, and considered input from management including the
Executive Chairman. The Compensation Committee further considered the structure it utilized for 2022 compensation, and
because CVR Energy’s compensation philosophies, objectives, and processes are generally aligned with ours, the vote of CVR
Energy’s stockholders from its 2023 Annual Meeting, in which CVR Energy stockholders overwhelmingly approved, on an
advisory basis, its named executive officer compensation for 2022, including for Mr. Pytosh. As a result, the Compensation
Committee determined no material changes to such structure was appropriate at the time and elected to keep the compensation
structure for 2023 compensation the same as 2022.
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2023 Named Executive Officer Compensation - CVR Partners
2023 Target Compensation Mix. The 2023 target compensation mix established by the Compensation Committee for our
CEO, Mr. Pytosh, was predominantly variable or “at risk” at 77%.
(1) Comprised of that portion of our CEO’s 2023 base salary, target annual performance-based bonus, and target long-term incentive
phantom awards determined by the Partnership. Actual compensation may differ therefrom.
Compensation Elements. As was the case in 2022, the three primary components of CVR Partners’ compensation
program for 2023 included base salary, an annual performance-based cash bonus, and an annual equity-based long-term
incentive award vesting ratably over three years. The Compensation Committee has not adopted any formal or informal policies
or guidelines for allocating compensation between long-term and current compensation.
Base Salary. Base salaries are set at a level intended to enable CVR Partners to hire and retain executives and to enhance
the executive’s motivation in a highly competitive and dynamic environment. Rather than establishing compensation solely on a
formula-driven basis, base-salary determinations by our Compensation Committee are made using an approach that considers
several important factors including: (i) CVR Partners’ financial and operational performance for the year; (ii) the previous
years’ compensation level for each executive; (iii) recommendations of the Executive Chairman based on individual
responsibilities and performance, (iv) the directors’ own common sense, knowledge, experience, judgment and views of the
skills necessary for long-term performance; (v) whether individual base salaries reflect responsibility levels and are reasonable,
competitive and fair; and (vi) each named executive officer’s commitment and ability to strategically meet business challenges,
achieve financial results, promote legal and ethical compliance, lead their own business or business team for which they are
responsible and diligently and effectively respond to immediate needs of the volatile industry and business environment. In
February 2023, considering the factors set forth above, the Compensation Committee established 2023 base salary for Mr.
Pytosh of $377,564.2
2022 Annual Performance-Based Bonus Results. In February 2023, the Compensation Committee evaluated the metrics
included in CVR Partners’ annual performance-based bonus program for 2022 (the “2022 UAN Plan”), which applies to all
eligible employees of the Partnership’s subsidiaries (including Mr. Pytosh), and the Partnership’s Mission and Values described
in Management’s Discussion and Analysis above, and further considered the Compensation Committee’s objectives of
rewarding employees (including named executive officers) for measured performance, aligning employees’ interests with those
of its unitholders, encouraging employees to focus on targeted performance, and providing employees with the opportunity to
earn additional compensation based on their and the Partnership’s performance. Based on these considerations, in February
2 In February 2023, the CVI Compensation Committee determined a base salary for Mr. Pytosh of $251,709 based on his time dedicated to
CVR Energy. Mr. Pytosh’s collective base salary, including that determined by the Compensation Committee, was $629,273.
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2023, the Compensation Committee approved payout to Mr. Pytosh under the 2022 UAN Plan of $478,000, approximately 97%
of his respective target annual bonus based on his base salary for the Partnership.3
2023 Annual Performance-Based Bonus. In February 2023, the Compensation Committee, following consultation with
our Executive Chairman, established the 2023 CVR Partners, LP Performance-Based Bonus Plan (the “2023 UAN Plan”),
which applies to all eligible employees of the Partnership’s subsidiaries (including Mr. Pytosh), and contains terms generally
equivalent to the 2022 UAN Plan subject to adjustments to the reliability measures and return on capital employed (“ROCE”)
bonus achievement thresholds, as well as to the definition of adjusted EBITDA, among other definitions, and that align with the
compensation philosophy and objectives outlined above.
As was the case with the 2022 UAN Plan, payout under the 2023 UAN Plan was dependent first on achievement of an
Adjusted EBITDA Threshold4 and following achievement thereof, based upon the achievement of the Partnership under the
performance measures specified below, followed by an adjustment based on employees’ individual performance. These
performance measures, including the threshold, target, and maximum performance goals for each such performance measure,
were determined by the Compensation Committee based on its discussions with management including the Executive Chairman
and the Directors’ knowledge and experience, and were selected with the goals of enforcing the Partnership’s Mission and
Values, optimizing operations, maintaining financial stability, and providing a safe and environmentally responsible workplace
intended to maximize CVR Partners’ overall performance resulting in increased unitholder value. The Partnership performance
measures in the 2023 UAN Plan are as follows:
Environmental Health & Safety (“EH&S”) Measures (25%)
Three measures evenly weighted (33-1/3% each): Total Recordable Injury Rate (TRIR), Process Safety Tier I Incident Rate
(PSIR), and Environmental Events (EE):
Percentage Change (over the prior year)
Increase in TRIR, PSIR or EE
Bonus Achievement
Zero
0%
Decrease > 0% and < 3%
Decrease of 3%
Decrease > 3% and < 10%
Decrease of 10% or more, or if TRIR is maintained at or
below 1.0, PSIR at or below 0.2 and EE at or below 20
Financial Measures (75%)
Four measures evenly weighted (25% each):
Reliability
Greater than 7.0%
7%
5.01% to 6.99%
5%
4.0% to 4.99%
Less than 4.0%
50% of Target Percentage (Threshold)
Linear Interpolation between Threshold and Target
Target Percentage
Linear Interpolation between Target and Maximum
150% of Target (Maximum)
Bonus Achievement
Zero
50% of Target Percentage (Threshold)
Linear Interpolation between Threshold and Target
Target Percentage
Linear Interpolation between Target and Maximum
150% of Target (Maximum)
3 In February 2023, the CVI Compensation Committee approved payout to Mr. Pytosh under the 2022 Performance-based bonus plan of CVR
Energy (“2022 CVI Plan”) of $373,500, approximately 118% of target, based on base-salary determined by CVR Energy.
4 Per the 2023 UAN Plan, “Adjusted EBITDA Threshold” means actual maintenance and sustaining capital expenditures plus reserves for
turnaround expenses plus interest on debt for the given Performance Period, and board-directed actions. Adjusted EBITDA and the Adjusted
EBITDA Threshold are non-GAAP financial measures and the Adjusted EBITDA Threshold is not the equivalent of Adjusted EBITDA as
reflected in this Annual Report in Part II, Item 7. Non-GAAP Reconciliations.
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Equipment Utilization
Less than 95%
95%
95.01% to 99.99%
100%
100.01% to 104.99%
Greater than 105%
Operating Expense
Greater than 103.0%
103%
100.1% to 102.99%
100%
95.0% to 99.99%
Less than 95%
ROCE (Ranking vs. Peer Group)
First (highest)
Second
Third
Fourth
Fifth
Sixth
Seventh
Bonus Achievement
Zero
50% of Target Percentage (Threshold)
Linear Interpolation between Threshold and Target
Target Percentage
Linear Interpolation between Target and Maximum
150% of Target (Maximum)
Bonus Achievement
Zero
50% of Target Percentage (Threshold)
Linear Interpolation between Threshold and Target
Target Percentage
Linear Interpolation between Target and Maximum
150% of Target (Maximum)
Bonus Achievement
150% of Target (Maximum)
125% of Target Percentage
112.5% of Target Percentage
Target Percentage (100%)
50% of Target Percentage
Zero
Zero
The Peer Group utilized in the 2023 UAN Plan for determination of ROCE was selected by the Compensation Committee
based on discussions with the Executive Chairman and the President and Chief Executive Officer and the Directors’ knowledge
of the fertilizer industry, and was intended to include companies in the fertilizer industry with similar operations to the
Partnership and those with which the Partnership competes for executive talent. The Compensation Committee elected to keep
the Peer Group for 2023 the same as 2022, including CF Industries Holdings, Inc.; LSB Industries, Inc.; Nutrien Ltd.; The
Andersons, Inc.; Green Plains Partners LP; and Flotek Industries Inc.
The 2023 UAN Plan includes a target bonus percentage for each participant, with possible payout between 0% and 150%
of target based on achievement under the measures set forth in the 2023 UAN Plan. In setting Mr. Pytosh’s target bonus
percentage for 2023, the Compensation Committee considered his bonus target for 2022, the total cash compensation to which
Mr. Pytosh may be eligible in 2023, the expected ratio of salary to bonus and the Compensation Committee’s belief that a
significant portion of its named executive officers’ compensation should be at risk based on individual and entity performance,
and elected to keep his bonus target for 2023 the same as 2022, at 135% of base salary.
2023 Annual Performance-Based Bonus Results
In February 2024, the Compensation Committee evaluated and certified to the performance metrics included in the 2023
UAN Plan and determined that the Partnership had achieved Adjusted EBITDA under the 2023 UAN Plan in excess of the
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Adjusted EBITDA Threshold, and thereafter determined that the Partnership’s achievement of the metrics under the 2023 UAN
Plan resulted in payout of 100% of target, based on the following:
Measure
2023 Actual
Bonus Achievement
EH&S:
TRIR
PSIR
EE
Increase of 367%
Decrease of 100%
Less than 20
Overall EH&S
Financial:
Reliability
Equipment Utilization
Operating Expenses
ROCE
1.7%
103.0%
110.0%
Second
Overall Financial
0 %
150 %
150 %
100 %
150 %
127 %
0 %
125 %
101 %
As a result, in February 2024, the Compensation Committee approved payout to Mr. Pytosh under the 2023 UAN Plan of
$506,400, approximately 100% of his respective target annual bonus based on his base salary for the Partnership.5
Long-Term Incentive Awards. The Compensation Committee believes long-term incentive compensation is one of the
most crucial elements of its compensation program because it aligns the interests of management with our unitholders and
serves to both incentivize and retain executives. The amount of a long-term incentive award is made after consideration of
various relevant factors including the named executives’ overall compensation package, the compensation philosophies and
objectives described above, the Partnership’s interest in rewarding long-term performance of, and in retaining, its named
executive officers and the ability to generate greater future value if the value of CVR Partners increases for all of its
unitholders. CVR Partners established its long-term incentive plan in March 2011 (the “CVR Partners LTIP”) in connection
with the completion of its initial public offering in April 2011. The Compensation Committee may elect to make grants of
restricted units, options, phantom units or other equity-based awards under the CVR Partners LTIP in its discretion or may
recommend grants to the Board for its approval, as determined by the Compensation Committee in its discretion. Effective
December 2022, the Compensation Committee awarded Mr. Pytosh 6,001 phantom units of the Partnership, as part of his 2023
compensation, which phantom units vest ratably over three years, subject to the terms and conditions of the award agreement.6
Perquisites. The total value of all perquisites and personal benefits provided to each of its named executive officers in 2023
was less than $10,000.
Benefits. During 2023, all of the named executive officers participated in the health and welfare benefit and retirement
plans of CVR Energy.
Other Forms of Compensation. Mr. Lamp has provisions in his employment agreements with CVR Energy that provide
for severance benefits in the event of a termination of his employment under certain circumstances. Additionally, all of our
other named executive officers are subject to a Change in Control Severance Plan (the “CVI Severance Plan”), which provides
for severance benefits in the event of employment termination under certain circumstances. These severance provisions are
described below in “Change-in-Control and Termination Payments.”
5 In February 2024, The CVI Compensation Committee also awarded a payout to Mr. Pytosh under the 2023 performance-based bonus plan
for CVR Energy (the “2023 CVI Plan”), based on CVR Energy’s achievement under the 2023 CVI Plan, which contains measures generally
equivalent to the measures applicable under the 2023 UAN Plan, of 108%, resulting in a total performance-based bonus payout of $865,700.
6 Effective December 2022, as part of his 2023 compensation, the CVI Compensation Committee awarded Mr. Pytosh 12,348 incentive units
in connection with the long-term incentive plan of CVR Energy (the “CVI LTIP”), which will vest in one-third increments every December
following the date of award, subject to the terms of the award agreement.
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2023 Named Executive Officer Compensation - CVR Energy
The objectives, considerations, and process utilized by the CVI Compensation Committee in general, as well as in setting
2023 compensation for named executive officers of CVR Energy, was virtually identical to the objectives, considerations,
process, and structure used by the Compensation Committee. Related to 2023, the CVI Compensation Committee approved:
•
•
•
•
•
•
2023 Compensation Structure. Compensation structure consistent with the compensation structure approved by the
Compensation Committee including a mix of base salary, performance-based bonus compensation, and long-term
incentives.
2023 Base Salaries. Base salaries for Messrs. Lamp, Pytosh (as to 40% of his base salary), Neumann, and Conaway,
and Ms. Buhrig, of $1,100,000; $251,709; $522,500; $322,989; and $631,875, respectively.
2022 Performance-Based Bonus Plan Results. The 2022 CVI Plan, including target payouts as a percentage of base
salary of 150% for Mr. Lamp, 135% for Mr. Pytosh, 120% for each of Mr. Neumann and Ms. Buhrig, and 60% for Mr.
Conaway, contained terms and performance measures substantially similar to the 2021 CVI Plan and the 2022 UAN
Plan subject to, in the case of comparison to the 2020 CVI Plan, the adjustment of Adjusted EBITDA and Adjusted
EBITDA Threshold.7 The peer group in the 2022 CVI Plan was the same as in the 2021 CVI Plan, and included six
publicly traded petroleum refining and marketing companies the CVI Compensation Committee considered to be
similar to CVR Energy with respect to operations and also competitive with CVR Energy for executive talent (Delek
US Holdings, Inc.; HollyFrontier Corporation8; Marathon Petroleum Corp.; Par Pacific Holdings, Inc.; PBF Energy
Inc.; and Valero Energy Corp.(collectively, the “2022 Peer Group”)). In February 2023, the CVI Compensation
Committee approved payouts for Messrs. Lamp, Pytosh, Neumann, and Conaway and Ms. Buhrig under the 2022 CVI
Plan of $1,947,100, $373,500, $650,200, $198,000, and $886,000, respectively.
Project Renew Bonus. In February 2023, the CVI Compensation Committee approved one-time bonuses for Messrs.
Neumann and Conaway and Ms. Buhrig of $150,000, $50,000, and $200,000, respectively, in each case in recognition
of their respective outstanding performance in connection with, and the successful completion of CVR Energy’s effort
to transform its business by segregating its renewables business, operations and assets from its other business lines.
2023 Performance-Based Bonus Plan Results. The 2023 CVI Plan, including target payouts as a percentage of base
salary of 150% for Mr. Lamp, 135% for Mr. Pytosh, 120% for each of Mr. Neumann and Ms. Buhrig, and 60% for Mr.
Conaway, contained terms and performance measures substantially similar to the 2022 CVI Plan, other than the same
adjustments made to the 2023 UAN Plan outlined earlier herein. The peer group in the 2023 CVI Plan is the same as in
the 2022 CVI Plan. In February 2024, the CVI Compensation Committee approved payouts for Messrs. Lamp, Pytosh,
Neumann, and Conaway and Ms. Buhrig under the 2023 CVI Plan of $1,782,100, $359,300, $699,000, $201,100, and
$843,800, respectively.
2023 Long-Term Incentive Awards. In December 2022, as part of 2023 compensation, incentive units in connection
with the CVI LTIP were granted to Messrs. Lamp, Pytosh, Neumann, and Conaway and Ms. Buhrig of 41,888; 12,348;
15,232; 4,468; and 18,253, respectively, which vest in one-third increments each December following the date of
award, subject to the terms and conditions of the award agreement.9
Equity Ownership Requirements. CVR Partners has not established equity ownership requirements for its executive
officers, and all long-term incentive or phantom awards issued in connection with but not under the CVI LTIP or UAN LTIP, as
applicable, are generally settled in cash. The Compensation Committee believes that cash-settled awards provide the executive
officers with a more attractive compensation package and are less burdensome for the Partnership to administer than equity-
settled awards. Additionally, equity-settled compensation in the form of Partnership common units or CVR Energy common
stock would dilute the ownership interests of existing unit/stockholders.
Hedging. We have a policy that prohibits our directors and named executive officers from engaging in transactions that
hedge or offset, or are designed to hedge or offset, any decrease in the market value of CVR Partners securities by selling
securities of CVR Partners “short”, and we recommend all employees follow this practice. We also strongly recommend that
directors, named executive officers and employees, as well as persons residing in their households, not trade in exchange-traded
7 Per the 2022 CVI Plan, Adjusted EBITDA Threshold means actual maintenance and sustaining capital expenditures plus reserves for
turnaround expenses plus interest on debt for the given performance period and board-directed items.
8 Now known as HF Sinclair Corporation.
9 Such incentive units were consistent with the named executive officer target awards, as determined by the Compensation Committee or CVI
Compensation Committee, as applicable, representing, as a percentage of base salary, 150% for Mr. Lamp, 200% for Mr. Pytosh, 120% for
each of Mr. Neumann and Ms. Buhrig, and 60% for Mr. Conaway.
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or other third-party options, warrants, puts and calls or similar instruments on CVR Partners securities, hold securities of CVR
Partners in margin accounts, or conduct “sales against the box” (i.e., selling of borrowed securities without ownership of
sufficient shares to cover the sale).
Clawback / Recoupment of Compensation. In October 2023, the Board approved a Clawback Policy applicable to
executive officers that implements the incentive-based compensation recovery provisions of the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 as required under the NYSE listing standards, which requires recovery of
incentive-based compensation received by current or former executive officers during the three fiscal years preceding the date it
is determined that the Partnership is required to prepare an accounting restatement, including to correct an error that would
result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. The
amount required to be recovered is the excess of the amount of incentive-based compensation received over the amount that
otherwise would have been received had it been determined based on the restated financial measure. Additionally, our long-
term incentive plan award agreements and performance-based bonus plan contain provisions providing for cancellation,
forfeiture, rescission, repayment, recoupment or claw-back, as applicable, of certain compensation paid to our employees,
including our named executive officers, under certain circumstances, including in the event of (i) a restatement of the financial
results of CVR Partners that would reduce (or would have reduced) the amount of any previously awarded phantom units, (ii) a
determination by the Board or the Compensation Committee that the grantee of an award has engaged in misconduct (including
by omission) or that an event or condition has occurred, which, in each case, would have given the Partnership or its
subsidiaries the right to terminate the grantee’s employment for cause, (iii) misconduct or gross dereliction of duty resulting in a
violation of law or Partnership policy that causes significant harm to the Partnership, or (iv) other triggering events defined in
the long-term incentive plan award agreements and the CVR Partners’ performance-based bonus plan.
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The Compensation Committee of our General Partner has reviewed and discussed the CD&A with management. Based on
this review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this Report.
Compensation Committee Report
Compensation Committee
Frank M. Muller, Jr. (Chair)
Jordan Bleznick
February 21, 2024
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Summary Compensation Table
The following table sets forth the compensation for our named executive officers for the years ended December 31, 2023,
2022, and 2021. The compensation shown reflects not only the portion of such named executive officers’ compensation defined
by the Compensation Committee and attributable to services performed for our business, but also the portion of such named
executive officers’ compensation defined by the CVI Compensation Committee and attributable to services performed for CVR
Energy.
Name and Principal Position
Year
Salary (1)
Bonus (2)
Stock
Awards (3)
Non-Equity
Incentive Plan
Compensation (4)
All Other
Compensation (5)
Total
David L. Lamp, Executive Chairman
2023
$
1,100,000 $
— $
1,592,076 $
1,782,100 $
26,658 $
4,500,834
Mark A. Pytosh, President and Chief
Executive Officer
Dane J. Neumann, Executive Vice
President, Chief Financial Officer,
Treasurer and Assistant Secretary
Melissa M. Buhrig, Executive Vice
President, General Counsel and
Secretary
Jeffrey D. Conaway, Vice President,
Chief Accounting Officer and
Corporate Controller
2022
2021
1,100,000
1,000,000
—
—
1,247,425
1,196,795
1,947,100
1,710,000
26,312
4,320,837
3,564
3,910,359
2023
$
629,273 $
— $
1,181,850 $
865,700 $
22,122 $
2,698,945
2022
2021
607,993
590,284
—
—
1,023,993
1,041,190
851,500
834,100
20,622
2,504,108
2,322
2,467,896
2023
$
522,500 $
150,000 $
604,967 $
699,000 $
20,286 $
1,996,753
2022
2021
450,000
286,961
—
—
453,609
382,965
650,200
250,400
18,740
1,572,549
440
920,766
2023
$
631,875 $
200,000 $
731,381 $
843,800 $
20,610 $
2,427,666
2022
2021
598,934
570,413
—
—
543,574
545,738
886,000
793,500
19,110
2,047,618
810
1,910,461
2023
$
322,989 $
50,000 $
187,179 $
201,100 $
20,468 $
781,736
2022
2021
293,626
238,849
—
—
133,057
138,815
198,000
128,000
18,611
279
643,294
505,943
(1) Amounts in this column reflect the base salaries of the named executive officers, and (i) for 2022 for Mr. Neumann, the total base salary
received, including as a result of salary adjustments approved by the CVI Compensation Committee in February and October 2022, and
(ii) for 2021, amounts for Messrs. Neumann and Conaway, total compensation received, including for time periods prior to their
appointment to Chief Financial Officer and Chief Accounting Officer, in October and August 2021, respectively.
(2) Amounts in this column include a discretionary bonus amount, if any, paid based on individual performance, significant achievements,
and related factors. Amounts in this column for 2023 for Messrs. Neumann and Conaway and Ms. Buhrig represent one-time bonuses in
recognition of their respective outstanding performance in connection with, and the successful completion of, CVR Energy’s effort to
transform its business by segregating its renewables business, operations and assets from its other business lines.
(3) Amounts in this column reflect the aggregate grant date fair value, as calculated in accordance with Financial Accounting Standards
Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“Topic 718”), of incentive units granted to
each named executive officer during the periods specified in connection with the CVI LTIP, and additionally for Mr. Pytosh, phantom
units granted in connection with the CVR Partners LTIP.
(4) Amounts in this column reflect: (a) for 2023, amounts earned under the 2023 CVI Plan, and additionally for Mr. Pytosh, amounts earned
under the 2023 UAN Plan, which are expected to be paid in March 2024; (b) for 2022, amounts earned under the 2022 CVI Plan, and
additionally for Mr. Pytosh, amounts earned under the 2022 UAN Plan, each of which were paid in the following year; and (c) for 2021,
for Mr. Pytosh, amounts earned under the 2021 UAN Plan paid in the following year.
(5) Amounts in this column reflect the following:
Name
David L. Lamp
Mark A. Pytosh
Dane J. Neumann
Melissa M. Buhrig
Jeffrey D. Conaway
401(k) Plan (a)
2022
2023
2021
2023
Life Insurance (b)
2022
2021
2023
Other (c)
2022
2021
$ 19,800 $ 18,300 $
— $
6,858 $
6,858 $
3,564 $
— $
1,154 $
19,800
19,800
19,800
19,800
18,300
18,300
18,300
18,300
—
—
—
—
2,322
2,322
2,322
486
810
668
440
810
311
440
810
279
—
—
—
—
—
—
—
—
—
—
—
—
—
(a) Reflects employer contributions under the CVR Energy 401(k) plan.
December 31, 2023 | 97
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(b) Reflects the imputed income amount that is included in taxable income for each named executive officer pursuant to the Group
Term Life Insurance Plan.
(c) Reflects for Mr. Lamp, a retroactive catch-up payment equal to the difference between Mr. Lamp’s prior base salary and the base
salary under the 2021 Employment Agreement for the 10-day period from December 22, 2021 to December 31, 2021.
As described in more detail in the CD&A, the named executive officers, including Mr. Pytosh, are employed by a
subsidiary of CVR Energy and dedicated only a portion of their time to our business in 2023, with the remainder dedicated to
the business of CVR Energy and its subsidiaries.
The following table outlines 2023 compensation paid or granted to the named executive officers that was attributable to
their service to our business, based on the approximate percentage of time that each of them dedicated thereto during 2023
(10%, 18%, and 20% for Messrs. Lamp, Neumann, and Conaway, respectively, and 20% for Ms. Buhrig), and for Mr. Pytosh,
the compensation determined by the Compensation Committee.
Name
Salary
Bonus
Stock Awards
Non-Equity
Incentive Plan
Compensation
David L. Lamp
Mark A. Pytosh
Dane J. Neumann
Melissa M. Buhrig
Jeffrey D. Conaway
Grants of Plan-Based Awards
$
110,000 $
377,564
94,050
126,375
64,598
— $
—
27,000
40,000
10,000
159,208 $
695,941
108,894
146,276
37,436
All Other
Compensation
2,666
13,273
3,651
4,122
4,094
178,210 $
506,400
125,820
168,760
40,220
The following table sets forth information concerning amounts that could have been earned by our named executive
officers under the 2023 UAN Plan and the 2023 CVI Plan, as well as granted in connection with the CVR Partners LTIP and the
CVI LTIP, as applicable, during 2023:
Name
Bonus Plan /
Award Type
Grant Date
Threshold (3)
Target
Maximum
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)
Estimated Future Payouts
under Equity Incentive
Plan Awards (2)
Number
of Shares of
Stock or Units
Grant Date
Fair Value
David L. Lamp
2023 CVI Plan
2/17/23
Incentive Units
12/13/23
Mark A. Pytosh
2023 CVI Plan
2023 UAN Plan
Incentive Units
Phantom Units
2/17/23
2/17/23
12/13/23
12/13/23
Dane J. Neumann
2023 CVI Plan
2/17/23
Incentive Units
12/13/23
Melissa M. Buhrig
2023 CVI Plan
2/17/23
Jeffrey D. Conaway
2023 CVI Plan
2/17/23
Incentive Units
12/13/23
$
$
$
$
$
68,756 $
1,650,000 $
2,475,000
—
—
—
—
—
52,165 $
1,592,076
14,160 $
339,807 $
509,711
21,240
509,711
764,567
—
—
—
—
—
—
—
—
—
—
15,921 $
485,909
11,066
695,941
26,127 $
627,000 $
940,500
—
—
19,822 $
604,967
31,596 $
758,250 $
1,137,375
—
—
8,075 $
193,793 $
290,690
—
—
23,964 $
731,381
Incentive Units
12/13/23
—
—
—
6,133 $
187,179
(1) Amounts in these columns reflect amounts that could have been earned by the named executive officers under the 2023 UAN Plan (with
respect to Mr. Pytosh) or under the 2023 CVI Plan (with respect to Messrs. Lamp, Pytosh, Neumann, and Conaway and Ms. Buhrig)
with respect to each performance measure, excluding the impact of any individual discretionary performance adjustments. The
performance measures for 2023 were set by the Compensation Committee and the CVI Compensation Committee, as applicable, as
described in the “Compensation Discussion and Analysis”.
(2) Amounts in these columns reflect the number of and grant date fair value, as calculated in accordance with Topic 718, of (i) phantom
units awarded to Mr. Pytosh during 2023 as part of 2024 compensation in connection with the UAN LTIP; and (ii) incentive units
awarded to Messrs. Lamp, Pytosh, Neumann, and Conaway and Ms. Buhrig by CVR Energy during 2023 as part of 2024 compensation
in connection with the CVI LTIP.
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(3) For the 2023 UAN Plan and the 2023 CVI Plan, ‘Threshold’ represents the minimum payout thereunder, assuming the Partnership and
CVR Energy, as applicable, have satisfied the Adjusted EBITDA Thresholds and have achieved performance under one of the EH&S
measures equal to the prior year performance, resulting in a payout of 50% of the 8.33% measure value, or 4.167% of total target payout.
For more information and full description of the 2023 CVI Plan and the 2023 UAN Plan, see “Compensation Discussion and Analysis.”
However, in certain circumstances, including in the event the Adjusted EBITDA Threshold is not achieved, the named executive officers
may receive payout that is less than the Threshold or zero.
Employment Agreement and Incentive Payment
Employment Agreements with CVR Partners. None of our named executive officers have an employment agreement with
the Partnership, our General Partner or their subsidiaries.
Employment Agreements with CVR Energy. Other than Mr. Lamp, none of our named executive officers have an
employment agreement with CVR Energy or its subsidiaries. Mr. Lamp’s employment agreement, which was effective on
December 22, 2021 (the “2021 Employment Agreement”), has an approximate three-year term, which expires on December 31,
2024, unless otherwise terminated, amended, or extended by CVR Energy or Mr. Lamp. Under the 2021 Employment
Agreement, in addition to the ability to participate in such health, insurance, retirement and other employee benefit plans and
programs of CVR Energy in effect from time to time on the same basis as other senior executives of CVR Energy, Mr. Lamp is
also eligible to receive:
•
•
•
An annual base salary of $1,100,000;
A performance-based annual cash bonus with a target payment equal to 150% of his annual base salary, with the actual
amount of such bonus received based upon individual and/or performance criteria as established by the CVI
Compensation Committee; and
For each fiscal year during the term of the 2021 Employment Agreement, an incentive unit award equal to 150% of his
base salary (or such other amount as agreed to by CVR Energy and Mr. Lamp) granted in connection with the CVI
LTIP.
The 2021 Employment Agreement also provides Mr. Lamp with severance payments in connection with the termination of
Mr. Lamp’s employment under certain circumstances, which payments are described below under “Change-in-Control and
Termination Payments,” and requires Mr. Lamp to abide by a perpetual restrictive covenant relating to non-disclosure and non-
disparagement, as well as covenants relating to non-solicitation and non-competition that govern during his employment and
thereafter for the period severance is paid and, if no severance is paid, for six months following termination of employment.
Mr. Lamp is also eligible to receive an incentive payment of $10 million (the “Incentive Payment”) payable if either the
conditions set forth in the 2021 Employment Agreement or the conditions set forth in a separate Performance Unit Award
Agreement, as amended on December 22, 2021 (as amended, the “PU Award Agreement”), are fulfilled, as follows:
Agreement
Conditions
Measurement Period
2021 Employment
Agreement
PU Award
Agreement
• a transaction is consummated that constitutes a Change-in-
Control,(1) or
• the Board approves a transaction which, if consummated,
would constitute a Change-in-Control(1) and such transaction
is consummated on or prior to December 31, 2025
The average closing price of CVR Energy’s common stock is
equal to or greater than $60.00 per share (subject to any
equitable adjustments required to account for splits, dividends,
combinations, acquisitions, dispositions, recapitalizations and
the like)
(1) Change-in-Control as defined in the 2021 Employment Agreement.
Prior to December 31, 2024
30-trading day period:
January 6, 2025 - February 20, 2025
Payment of the Incentive Payment under the 2021 Employment Agreement or the PU Award Agreement is conditioned
upon Mr. Lamp remaining employed with CVR Energy through December 30, 2024 (unless terminated by CVR Energy
without cause or by Mr. Lamp for good reason (as defined in the 2021 Employment Agreement) on or after the satisfaction of
the foregoing conditions and prior to December 30, 2024). Mr. Lamp will not under any circumstance be entitled to receive
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more than one Incentive Payment and if he becomes entitled to the Incentive Payment under the terms of the 2021 Employment
Agreement, Mr. Lamp will immediately forfeit any right to payments under the PU Award Agreement. The descriptions of
these agreements are qualified in their entirety by the text of such agreements, each as referenced in previous filings with the
SEC and as exhibits to this Annual Report on Form 10-K.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning outstanding phantom unit awards granted in connection with the
UAN LTIP that were held by certain of the named executive officers, as well as outstanding incentive unit awards made by
CVR Energy granted in connection with the CVI LTIP and for which the Partnership will share in the expense, both as of
December 31, 2023. This table also includes information regarding outstanding incentive unit awards made by CVR Energy to
Mr. Pytosh for which the Partnership does not share in the expense. All of the outstanding units or shares reflected below are
subject to accelerated vesting under certain circumstances as described in more detail in the section titled “Change-in-Control
and Termination Payments”.
Equity Awards That Have Not Vested
David L. Lamp
Mark A. Pytosh
Dane J. Neumann
Melissa M. Buhrig
Jeffrey D. Conaway
Name
Award Type (1)
Grant Date
Number of
Shares or
Units
Incentive Units
Incentive Units
Incentive Units
Phantom Units
Incentive Units
Phantom Units
Incentive Units
Phantom Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
12/8/21
12/14/22
12/13/23
12/8/21
12/8/21
12/14/22
12/14/22
12/13/23
12/13/23
12/8/21
12/14/22
12/13/23
12/8/21
12/14/22
12/13/23
12/8/21
12/14/22
12/13/23
24,177 (3)
27,925 (3)
52,165 (3)
2,924
7,614
4,000
8,232
11,066
15,921
7,736 (3)
10,154 (3)
19,822 (3)
11,025 (3)
12,168 (3)
23,964 (3)
2,804 (3)
2,978 (3)
6,133 (3)
Market Value
of Shares or
Units (2)
$
957,409
971,790
1,580,600
325,851
301,514
368,480
286,474
724,823
482,406
306,346
353,359
600,607
436,590
423,446
726,109
111,038
103,634
185,830
(1) These incentive and phantom units vest ratably in annual installments in each of the three years following the date of grant, subject to the
terms of the applicable award agreement.
(2) This column represents the number of unvested units outstanding on December 31, 2023, multiplied by: (a) for incentive units issued on
December 13, 2023, $30.30 (the December 31, 2023, closing price of CVR Energy common stock (the “CVI Closing Price”)); (b) for
incentive units issued on December 14, 2022, $34.80 (equal to the CVI Closing Price plus $4.50 in accrued dividends); (c) for incentive
units issued on December 8, 2021, $39.60 (equal to the CVI Closing Price plus $9.30 in accrued dividends); (d) for phantom units issued
on December 13, 2023, $65.50 (equal to the December 31, 2023 closing price of Partnership common units (the “UAN Closing Price”));
(e) for phantom units issued on December 14, 2022, $92.12 (equal to the UAN Closing Price, plus $26.62 in accrued distributions ); and
(f) for phantom units issued on December 8, 2021, $111.44 (equal to the UAN Closing Price, plus $45.94 in accrued distributions).
(3) The Partnership will share in a pro-rated portion of the expense associated with these awards based on the percentage of time that the
named executive officer dedicates to our business during the year of vesting.
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Equity Awards Vested During Fiscal Year 2023
This table sets forth information concerning phantom units awarded by us that vested during 2023, as well as incentive unit
awards made by CVR Energy that vested during 2023, for which the Partnership shared in the expense. This table also includes
incentive unit awards made by CVR Energy to Mr. Pytosh that vested during 2023 and for which the Partnership does not share
in the expense.
David L. Lamp
Name
Mark A. Pytosh
Dane J. Neumann
Melissa M. Buhrig
Jeffrey D. Conaway
Award Type
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Phantom Units
Incentive Units
Phantom Units
Incentive Units
Phantom Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Incentive Units
Equity Awards
Number of Shares or Units
Acquired on Vesting
Value Realized
on Vesting
44,722 $
24,178
13,963
82,863 $
13,536 $
31,096
7,614
2,925
4,116
2,001
61,288 $
4,502 $
7,737
5,078
17,317 $
19,260 $
11,025
6,085
36,370 $
465 $
2,444
2,804
1,490
7,203 $
2,019,646 (1)
973,648 (2)
495,268 (3)
3,488,562
611,286 (1)
3,650,359 (4) (5)
306,616 (2)
329,765 (6)
145,995 (3)
186,933 (7)
5,230,954
203,310 (1)
311,569 (2)
180,117 (3)
694,996
869,782 (1)
443,977 (2)
215,835 (3)
1,529,594
21,985 (8)
110,371 (1)
112,917 (2)
52,850 (3)
298,123
(1) The amount reflected includes a per unit value equal to (i) the average closing price of CVR Energy’s common stock in accordance with
the award agreement, and (ii) $14.19 in accrued dividends.
(2) The amount reflected includes a per unit value equal to (i) the average closing price of CVR Energy’s common stock in accordance with
the award agreement, and (ii) $9.30 in accrued dividends.
(3) The amount reflected includes a per unit value equal to (i) the average closing price of CVR Energy’s common stock in accordance with
the award agreement, and (ii) $4.50 in accrued dividends.
(4) The amount reflected includes a per unit value equal to (i) the average closing price of CVR Partners’ common units in accordance with
the award agreement, and (ii) accrued distributions of $50.59 per unit.
(5) Accrued distributions have been adjusted to reflect the reverse unit split of the Partnership’s common units that was effective as of
November 23, 2020.
(6) The amount reflected includes a per unit value equal to (i) the average closing price of CVR Partners’ common units in accordance with
the award agreement, and (ii) accrued distributions of $45.94 per unit.
(7) The amount reflected includes a per unit value equal to the average closing price of CVR Partners’ common units in accordance with the
award agreement, and (ii) accrued distributions of $26.62 per unit.
(8) The amount reflected includes a per unit value equal to (i) the average closing price of CVR Energy’s common stock in accordance with
the award agreement, and (ii) $10.69 in accrued dividends.
December 31, 2023 | 101
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Reimbursement of Expenses of Our General Partner
Our General Partner and its affiliates are reimbursed for expenses incurred on our behalf under the Corporate MSA. Refer
to Part II, Item 8, Note 12 (“Related Party Transactions”) and Part III, Item 13 of this Report for additional information. These
expenses include the costs of employee, officer and director compensation and benefits properly allocable to us, and all other
expenses necessary or appropriate to the conduct of our business and allocable to us. These expenses also include costs incurred
by CVR Energy or its affiliates in rendering corporate staff and support services to us pursuant to the Corporate MSA,
including a pro-rata portion of the compensation of CVR Energy’s executive officers who provide management services to us
based on the amount of time such executive officers devote to our business. For the year ended December 31, 2023, the total
amount paid to our General Partner and its affiliates (including amounts paid to CVR Energy pursuant to the Corporate MSA)
was approximately $18.9 million.
Our partnership agreement provides that our General Partner determines which of its affiliates’ expenses are allocable to us
and the Corporate MSA provides that CVR Energy invoice us monthly for services provided thereunder. Our General Partner
may dispute the costs that CVR Energy charges us under the Corporate MSA, but we are not entitled to a refund of any disputed
cost unless it is determined not to be a reasonable cost incurred by CVR Energy in connection with services it provided.
Change-in-Control and Termination Payments
Our named executive officers are entitled to severance and other benefits from CVR Energy following the termination of
their employment under certain circumstances as follows:
2021 Employment Agreement. If Mr. Lamp’s employment is terminated, he may become entitled to the following benefits
as more fully described in the 2021 Employment Agreement:
Reason for Employment Termination
Accrued Amounts (1)
Severance Payments (2)
LTIP Payout (3)
Incentive Payment (4)
Death, Disability or Termination
other than for cause or Resignation
for good reason, in each case not in
connection with a change-in-control
Resignation or Retirement
Termination without cause or
Resignation for good reason, in each
case in connection with a change-in-
control(5)
ü
ü
ü
ü
ü
ü
ü
(1)
(2)
(3)
Includes base salary earned but unpaid through date of termination or resignation, earned but unpaid Annual Bonus for completed fiscal
years, unused accrued paid time off, unreimbursed expenses, accrued and vested rights or benefits under any CVR Energy sponsored
employee benefit plans.
Includes continuation of base salary for the lesser of (i) six months, and (ii) the remainder of the term, plus a pro-rata Annual Bonus for
the fiscal year of termination based on individual achievement and/or performance criteria for such fiscal year, and/or in the case of
termination due to disability, payments under CVR Energy’s disability plan(s).
Includes the value of full vesting of any unvested incentive units (and accumulated dividend equivalent rights) but only if such incentive
units were granted more than one year prior to the date of termination of employment, calculated based on the 10-day average closing
price of a share of CVR Energy.
(4) $10 million.
(5) Termination or resignation is considered to be in connection with a change-in-control if it is a Change-in-Control Related Termination
(as defined in his 2021 Employment Agreement), which is a termination of employment other than for cause or a resignation for good
reason, in each case occurring within the 120-day period prior to the change-of -control and relating to such change-of-control. For the
avoidance of doubt, such benefits are conditioned upon the consummation of a change-in-control on or prior to December 31, 2025.
As a condition to receiving these severance benefits, Mr. Lamp must execute, deliver and not revoke a general release of
claims and abide by restrictive covenants relating to non-solicitation and non-competition during Mr. Lamp’s employment
term, and thereafter during the period he receives severance payments or supplemental disability payments, as applicable, or for
six months following the end of the term (if no severance or disability payments are payable), as well as a perpetual restrictive
covenant relating to non-disclosure and non-disparagement and covenants relating to non-solicitation and noncompetition. If
any payments or distributions due to Mr. Lamp would be subject to the excise tax imposed under Section 4999 of the Code,
December 31, 2023 | 102
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then such payments or distributions will be “cut back” only if that reduction would be more beneficial to him on an after-tax
basis than if there was no reduction. The meaning of all terms used, but not defined in this description of these benefits to which
Mr. Lamp is entitled upon employment termination, are as defined in the 2021 Employment Agreement and are qualified
thereby in the entirety.
CVI Severance Plan. Messrs. Pytosh, Neumann, and Conaway and Ms. Buhrig do not have employment agreements.
However, under the CVI Severance Plan, Messrs. Pytosh, Neumann, and Conaway and Ms. Buhrig are generally eligible for
certain payments in the event of their involuntary termination (other than for cause, as defined in the CVI Severance Plan) or
their resignation for good reason (as defined in the CVI Severance Plan) in connection with a change-in-control, as follows:
Reason for Employment Termination
Accrued Amounts (1)
Severance Payments (2) Vesting Acceleration (3)
Involuntary termination (other than for cause) in connection
with a change-in-control (4)
Resignation for good reason in connection with a change-in-
control (4)
ü
ü
ü
ü
ü
ü
(1) The sum of any base pay earned but unpaid through the date of termination, any unused accrued paid time off in accordance with the
applicable paid time off policy, any unreimbursed expenses in accordance with the applicable expense reimbursement policy, and any
accrued and vested rights or benefits under any CVR Energy sponsored employee benefits plans.
(2) The sum of (a) twelve (12) months of base pay, and (b) the average of the annual bonuses actually paid during the three calendar years
immediately preceding (or for such shorter period of time or 100% of target bonus, if applicable).
(3) Accelerated vesting as to 100% of the unvested incentive awards, calculated based on the 20-day average closing price of a share or
common unit of CVR Energy or the Partnership, as applicable, plus any accrued dividends declared and paid through the vest date.
(4) Occurring within the 120 days preceding or the 24 months following a change-in-control (as defined in the CVI Severance Plan).
Payout of these amounts are subject to various conditions including the execution of a release agreement, a perpetual
restrictive covenant relating to non-disclosure and non-disparagement and covenants relating to non-solicitation and non-
competition for a period of 12 months.
Award Agreements. Under the award agreements issued in connection with the UAN LTIP, as well as in connection with
the CVI LTIP, each of our named executive officers are also eligible for accelerated vesting of certain unvested incentive units
upon the events described below. Upon such accelerated vesting, the named executive officers will receive a cash payment
equal to (i) the number of units times the average closing price of a common unit of Partnership or a common share of CVR
Energy, as applicable, for the ten trading days preceding the vest date, plus (ii) the per unit cash value of distributions and
dividends declared and paid by the Partnership or CVR Energy, as applicable, from the grant date to and including the vest date.
These award agreements generally provide for acceleration upon certain termination events, as follows:
•
•
For awards issued after February 21, 2022, if the phantom units or incentive units, as applicable, are cancelled or if
such named executive officer (a) is terminated other than for cause, or (b) is terminated due to death or disability, then
the portion of any award scheduled to vest within twelve months of such event becomes immediately vested and the
remaining portion is forfeited.
For awards issued before February 21, 2022, if the phantom units or incentive units, as applicable, are cancelled or if
such named executive officer (a) is terminated other than for cause, or (b) is terminated due to death or disability, then
the portion of any award scheduled to vest in the year such event occurs shall become immediately vested and the
remaining portion is forfeited.
Potential Payments upon Termination or Change in Control
The following table reflects amounts payable to our named executive officers as a result of the hypothetical termination
events outlined below assuming the triggering employment termination event took place on December 31, 2023. Pursuant to the
Corporate MSA, we are responsible for the payment of our proportionate share of these severance benefits under the 2021
Employment Agreement, the CVI Severance Plan, award agreements, and other benefits costs following the termination of
December 31, 2023 | 103
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employment of the named executive officers. The actual payments to which a named executive officer would be entitled may
only be determined based upon the actual occurrence and circumstances surrounding the termination.
Name and Severance Benefit
Death
Disability
Retirement
Termination without
Cause
Resignation for Good
Reason
(1)
(2)
(1)
(2)
David L. Lamp
Benefits Continuation
Accrued Amounts (3)
$
— $
— $
— $
— $
— $
— $
—
1,782,100
1,782,100
1,782,100
1,782,100
1,782,100
1,782,100
1,782,100
Accelerated Vesting - Incentive Units (4)
3,022,931
3,022,931
—
3,022,931
3,022,931
1,979,738
3,022,931
Cash Severance (5)
Total Amount
Mark A. Pytosh
550,000
550,000
—
550,000
10,000,000
550,000
10,000,000
$ 5,355,031 $ 5,355,031 $ 1,782,100 $ 5,355,031 $ 14,805,031 $ 4,311,838 $ 14,805,031
Benefits Continuation
$
— $
— $
— $
— $
— $
— $
—
Accelerated Vesting - Phantom Units (6)
Accelerated Vesting - Incentive Units (7)
Cash Severance (8)
Total Amount
Dane J. Neumann
445,098
313,179
—
445,098
313,179
—
—
—
—
445,098
1,455,134
—
1,455,134
313,179
1,094,855
—
1,094,855
—
1,369,706
—
1,369,706
$
758,277 $
758,277 $
— $
758,277 $ 3,919,695 $
— $ 3,919,695
Benefits Continuation
$
— $
— $
— $
— $
— $
— $
—
Accelerated Vesting - Incentive Units (7)
388,236
388,236
—
—
—
—
388,236
1,289,350
—
1,289,350
—
1,172,700
—
1,172,700
$
388,236 $
388,236 $
— $
388,236 $ 2,462,050 $
— $ 2,462,050
Cash Severance (8)
Total Amount
Melissa M. Buhrig
Cash Severance (8)
Total Amount
Jeffrey D. Conaway
Cash Severance (8)
Total Amount
Benefits Continuation
$
— $
— $
— $
— $
— $
— $
—
Accelerated Vesting - Incentive Units (7)
467,409
467,409
—
—
—
—
467,409
1,622,456
—
1,622,456
—
1,471,625
—
1,471,625
$
467,409 $
467,409 $
— $
467,409 $ 3,094,081 $
— $ 3,094,081
Benefits Continuation
$
— $
— $
— $
— $
— $
— $
—
Accelerated Vesting - Incentive Units (7)
117,209
117,209
—
—
—
—
117,209
—
409,677
520,989
—
—
409,677
520,989
$
117,209 $
117,209 $
— $
117,209 $
930,666 $
— $
930,666
(1) Severance payments and benefits in the event of termination without cause or resignation for good reason not in connection with a
change in control.
(2) Severance payments and benefits in the event of termination without cause or resignation for good reason in connection with a change in
control.
(3) Accrued Amounts represents, as defined in the 2021 Employment Agreement, Mr. Lamp’s earned but unpaid Annual Bonus under the
2023 CVI Plan.
(4) For Mr. Lamp, the accelerated vesting value upon death, disability, or termination without cause or resignation for good reason in
connection with a change in control, represents (A) as defined in the 2021 Employment Agreement, the number of any unvested
incentive units held as of December 31, 2023, that were granted more than one year prior thereto, multiplied by for incentive units
awarded (i) on December 8, 2021, the average closing price for CVR Energy common stock for the 10-trading days preceding
December 31, 2023, or $31.27 per share (the “CVI 10-day Average Price”), plus $9.30 in accrued dividends, and (ii) on December 14,
2022, the CVI 10-day Average Price, plus $4.50 in accrued dividends (the “LTIP Payout”), plus (B) for incentive units granted by CVR
Energy on or after February 21, 2022, as defined in the award agreement, the number of any unvested incentive units scheduled to vest
within twelve months from December 31, 2023, multiplied by for incentive units awarded (i) on December 14, 2022, the CVI 10-day
Average Price, plus $4.50 in accrued dividends, and (ii) on December 13, 2023 the CVI 10-day Average Price. The accelerated vesting
December 31, 2023 | 104
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value upon resignation for good reason not in connection with a change in control is equal to the LTIP Payout. For the avoidance of
doubt, as used herein, the term “LTIP Payout” is calculated as defined in Mr. Lamp’s 2021 Employment Agreement.
(5) For Mr. Lamp, the cash severance amount upon (A) death, disability, or termination without cause or resignation for good reason not in
connection with a change in control represents, as defined in the 2021 Employment Agreement, 6-months of Base Salary; and (B)
termination without cause or resignation for good reason in connection with a change in control represents, the Incentive Payment.
Provided that, in the case of payments upon disability, the 6-months of Base Salary may, in the event CVR Energy secures insurance to
cover its obligations, be lower. Additionally, in the case of a termination event on a date other than December 31st, Mr. Lamp would also
be entitled to a Pro Rata Bonus. The terms Pro-Rata Bonus, Base Salary, and Incentive Payment are all as defined in the 2021
Employment Agreement.
(6) For Mr. Pytosh, the accelerated vesting value upon (A) death, disability, or termination without cause not in connection with a change in
control, represents for phantom unit awards granted by the Partnership on or after February 21, 2022, pursuant to the award agreement,
the number of any unvested phantom units scheduled to vest within twelve months from December 31, 2023, multiplied by for phantom
units awarded (i) on December 14, 2022, the average closing price for Partnership common units for the 10 trading-days preceding
December 31, 2023, or $68.88 per unit (the “UAN 10-day Average Price”), plus $26.62 in accrued distributions, and (ii) on
December 13, 2023, the UAN 10-day Average Price; and (B) termination without cause or resignation for good reason, both in
connection with a change in control, represents pursuant to the CVI Severance Plan, the number of all unvested phantom units
outstanding on December 31, 2023, multiplied by, for phantom units awarded by the Partnership (i) on December 8, 2021, the average
closing price for Partnership common units for the 20 trading-days preceding December 31, 2023, or $67.50 per unit (the “UAN 20-day
Average Price”), plus $45.94 in accrued distributions, (ii) on December 14, 2022, the UAN 20-day Average Price plus $26.62 in accrued
distributions, and (iii) on December 13, 2023, the UAN 20-day Average Price.
(7) For Messrs. Pytosh, Neumann and Conaway and Ms. Buhrig, the accelerated vesting value upon (A) death, disability, or termination
without cause not in connection with a change in control, represents for incentive unit awards granted by CVR Energy on or after
February 21, 2022, pursuant to the award agreement, the number of any unvested incentive units scheduled to vest within twelve months
from December 31, 2023, multiplied by for incentive units awarded (i) on December 14, 2022, the CVI 10-day Average Price, plus $4.50
in accrued dividends, and (ii) on December 13, 2023 the CVI 10-day Average Price; and (B) termination without cause or resignation for
good reason, both in connection with a change in control represents, pursuant to the CVI Severance Plan, the number of all unvested
units outstanding on December 31, 2023, multiplied by, for incentive units awarded by CVR Energy (a) on December 8, 2021, the
average closing price for CVR Energy common stock for the 20-trading days preceding December 31, 2023, or $31.07 per share (the
“CVI 20-day Average Price”), plus $9.30 in accrued dividends, (b) on December 14, 2022, the CVI 20-day Average Price, plus $4.50 in
accrued dividends, and (c) on December 13, 2023, the CVI 20-day Average Price.
(8) For Messrs. Pytosh, Neumann and Conaway and Ms. Buhrig, cash severance amounts upon termination without cause or resignation for
good reason, both in connection with a change in control include, as defined under the CVI Severance Plan, a lump sum of twelve
months’ base pay plus a sum equal to the average of the annual bonuses actually paid during the immediately preceding three full
calendar years in which they served as a named executive officer.
Pay Ratio
For 2023, to identify the median of the annual total compensation of all our employees, as well as to determine the annual
total compensation of our median employee and our Principal Executive Officers, Mr. Lamp, our Executive Chairman, and Mr.
Pytosh, our President and Chief Executive Officer (collectively, “PEOs”), we used the following methodology and made the
following material assumptions, adjustments, and estimates:
(1) We determined that, as of December 31, 2023, the number of employees of the Partnership and its consolidated
subsidiaries consisted of 310 individuals, excluding our PEOs who are employed by CVR Services.
(2) To identify the “median employee” from the employee population, we compared the amount of annual total
compensation of such employees for 2023 determined in accordance with the requirements of Item 402(c)(2)(x) of
Regulation S-K, which consisted of salary, bonus, non-equity incentive plan compensation and other compensation.
We “annualized” the compensation of our full-time and part-time permanent employees as of December 31, 2023, to
adjust for the portion of the year that the employee did not work, if applicable. We did not make any cost-of-living
adjustments in identifying the “median employee”.
(3) To identify the annual total compensation of our median employee, we included the elements of such employee’s
compensation for 2023 determined in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.
(4) To identify the annual total compensation of our PEOs, we used the amounts reported in the “Total” column of our
2023 Summary Compensation Table included in this Item 11, which was calculated in accordance with the same
requirements of Item 402(c)(2)(x) of Regulation S-K, as adjusted to reflect the portion of such amount attributable to
Mr. Lamp’s and Mr. Pytosh’s service to the Partnership, of ten percent (10%) and sixty percent (60%), respectively,
and as further described in the table immediately following our 2023 Summary Compensation Table.
December 31, 2023 | 105
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Based on this methodology, we estimate that the ratio of the annual total compensation of each of our PEOs to the median
of the annual total compensation of all employees for 2023 was as follows:
Annual total compensation of Median Employee (1)
Annual total compensation of Executive Chairman (2)
CEO Pay Ratio (Executive Chairman)
Annual total compensation of President & CEO (2)
CEO Pay Ratio (President & CEO)
$130,537
$450,083
3:1
$1,593,178
12:1
(1) Excludes our PEOs.
(2) Adjusted to reflect the portion of such compensation attributable to service to the Partnership.
The totals and pay ratios described above are reasonable estimates calculated in a manner consistent with Item 402(u) of
Regulation S-K.
Compensation of Directors
Directors of our General Partner who are not officers, employees, or directors of CVR Energy or its affiliates (including
IEP) receive compensation for their services. This compensation is designed to attract and retain nationally recognized, highly
qualified directors to lead the Partnership and to be demonstrably fair to both the Partnership and such directors, taking into
consideration, among other things, the time commitments required for service on the Board and its committees.
In October 2022, the Board considered these goals and the compensation paid to such directors for 2022, and upon
recommendation of the Compensation Committee, elected to keep such compensation for 2023 the same as 2022. During 2023,
independent directors received an annual director fee of $35,000. The Audit Committee chair received an additional fee of
$15,000 per year, while the other directors serving on the Audit Committee received an additional fee of $7,500 per year. The
Compensation Committee and EH&S Committee chairs received an additional fee of $8,000 per year, while the other directors
serving on the Compensation Committee and EH&S Committee received an additional fee of $5,000 per year. In addition,
during 2023, independent directors are eligible to be reimbursed for out-of-pocket expenses in connection with attending
meetings of the Board and its committees and for director-related education expenses up to a maximum amount of $1,500 per
year. Each independent director was also eligible to receive an additional $1,500 per meeting for all meetings in excess of the
following threshold:
Board/Committee Meeting
Threshold Per Year
Board
Audit Committee
Compensation Committee
EH&S Committee
6
12
6
6
During 2023, directors that were not independent (including non-management directors who are or were employees or
officers of IEP) did not receive any compensation for their service on the Board or its committees, though they were entitled to
reimbursement of certain travel expenses incurred in connection with their service on the Board and its committees.
December 31, 2023 | 106
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The following table sets forth the compensation earned by or paid to each independent director of our General Partner who
are not officers, employees, or directors of CVR Energy or its affiliates for the year ended December 31, 2023:
Name
Donna R. Ecton
Frank M. Muller, Jr.
Peter K. Shea
Fees Earned or Paid
in Cash (1)
Unit Awards
Total Compensation
$
55,000 $
— $
55,500
50,500
—
—
55,000
55,500
50,500
(1) Amounts reflected in this column include annual retainer fees and additional fees for service as committee members, including for
service in chair positions.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The CVR Partners Long-Term Incentive Plan (“CVR Partners LTIP”) provides for the grant of options, unit appreciation
rights, distribution equivalent rights, restricted units, phantom units and other unit-based awards, each in respect of common
units. Individuals who are eligible to receive awards under the CVR Partners LTIP include employees, officers, consultants and
directors of CVR Partners and the general partner and their respective subsidiaries and parents. A maximum of 500,000
common units are issuable under the CVR Partners LTIP.
The table below contains information about securities authorized for issuance under the CVR Partners LTIP as of
December 31, 2023:
Plan Category
Equity compensation plans approved by security
holders:
CVR Partners LTIP
Equity compensation plans not approved by
security holders:
None
Total
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants, and Rights
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans
—
—
—
—
—
—
482,022 (1)
—
482,022
(1) Represents units that remain available for future issuance pursuant to the CVR Partners LTIP in connection with awards of options, unit
appreciation rights, distribution equivalent rights, restricted units, and phantom units.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding beneficial ownership of our common units as of February 20, 2024 by:
• our General Partner;
• each of our General Partner’s directors;
• each of our named executive officers;
• each unitholder known by us to beneficially hold five percent or more of our outstanding units; and
• all of our General Partner’s executive officers and directors as a group.
Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with
respect to securities. Unless indicated below, to our knowledge, the persons and entities named in the table have sole voting and
sole investment power with respect to all common units beneficially owned, subject to community property laws where
December 31, 2023 | 107
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applicable. The business address for each of our beneficial owners is c/o CVR Partners, LP, 2277 Plaza Drive, Suite 500, Sugar
Land, Texas 77479.
Name of Beneficial Owner
CVR Services, LLC (1)
Barclays Plc (2)
CVR GP, LLC (3)
Jordan Bleznick
Donna R. Ecton
David L. Lamp
Frank M. Muller, Jr.
Mark A. Pytosh
Peter K. Shea
Melissa M. Buhrig
Jeffrey D. Conaway
Dane J. Neumann
All directors and executive officers of our General Partner as a group (9 persons) (4)
*
Less than 1%
Common Units
Beneficially Owned
Number
Percent
3,892,000
621,054
36.8 %
5.8 %
—
—
1,250
—
3,512
30,593
59
2,200
—
—
37,614
—
—
—
—
—
*
*
*
*
*
*
(1) CVR Services is an indirect wholly-owned subsidiary of CVR Energy, with an address at 2277 Plaza Drive, Suite 500, Sugar Land, TX
77479. CVR Energy may be deemed to have direct beneficial ownership of the common units held by CVR Services by virtue of its
control of CVR Services. The directors of CVR Energy are Jaffrey A. Firestone, Hunter C. Gary, David L. Lamp, Stephen Mongillo, Ted
Papapostolou and James M. Strock.
(2) Beneficial ownership information is based on a Schedule 13G filed with the SEC on February 11, 2022, which indicates that Barclays Plc
and Barclays Bank Plc, both with an address of 1 Churchill Place, London, X0 E14 5HP, have sole voting power and sole dispositive
power with respect to 621,054 units.
(3) CVR GP, LLC, a wholly-owned subsidiary of CVR Services, is our General Partner and manages and operates CVR Partners and has a
non-economic general partner interest with an address at 2277 Plaza Drive, Suite 500, Sugar Land, TX 77479.
(4) The number of common units owned by all of the directors and executive officers of our General Partner, as a group, reflects the sum of
(i) the 30,593 common units owned by Mr. Pytosh, (ii) the 2,200 common units owned by Ms. Buhrig, (iii) the 1,250 common units
owned by Ms. Ecton, (iv) the 3,512 common units owned by Mr. Muller, and (v) the 59 common units owned by Mr. Shea.
Item 13. Certain Relationships and Related Transactions, and Director Independence
CVR Services owns (i) 3,892,000 common units, representing approximately 37% of our outstanding units (which entitles
it to receive distributions, including $103.6 million in 2023), and (ii) 100% of our General Partner with its non-economic
general partner interest (which does not entitle it to receive distributions).
Agreements with CVR Services and Its Subsidiaries
The Partnership, its General Partner and the Partnership subsidiaries are party to, or otherwise subject to certain agreements
with CVR Energy and its subsidiaries that govern the business relations among each party. We consider those agreements
related party transactions. The Partnership is party to the Limited Partnership Agreement, the Corporate Master Service
Agreement, and the Omnibus Agreement. Our Coffeyville Facility is party to the Coffeyville Master Service Agreement, the
Terminal and Operating Agreement, and the Environmental Agreement. Further, some of these agreements were not the result
of arm’s-length negotiations and the terms of these agreements are not necessarily at least as favorable to the parties to these
agreements as terms which could have been obtained from unaffiliated third parties. Refer to Part II, Item 8, Note 12 (“Related
Party Transactions”) of this Report for additional information related to these agreements. Refer also to Part IV, Item 15 of this
Report for the filed agreements.
December 31, 2023 | 108
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Conflicts of Interest
Conflicts of interest exist and may arise in the future as a result of the relationships between our General Partner and its
affiliates (including IEP, CVR Services, and CVR Energy), on the one hand, and us and our public unitholders, on the other
hand. Conflicts may arise as a result of (i) the overlap of directors and officers between our General Partner and CVR Energy,
which may result in conflicting obligations by these officers and directors, and (ii) duties of our General Partner to act for the
benefit of CVR Energy and its stockholders, which may conflict with our interests and the interests of our public unitholders.
The directors and officers of our General Partner have fiduciary duties to manage our General Partner in a manner beneficial to
CVR Services, its owner, and the stockholders of CVR Energy, its indirect parent. At the same time, our General Partner has a
contractual duty under our partnership agreement to manage us in a manner that is in our best interests.
Whenever a conflict arises between our General Partner, on the one hand, and CVR Services or any other public unitholder,
on the other, our General Partner will resolve that conflict. Our partnership agreement contains provisions that replace default
fiduciary duties with contractual corporate governance standards as set forth therein.
Related Party Transaction Policy
The Board has adopted a Related Party Transaction Policy, which is designed to monitor and ensure the proper review,
approval, ratification, and disclosure of related party transactions involving us. This policy applies to any transaction,
arrangement, or relationship (or any series of similar or related transactions, arrangements, or relationships) in which we are a
participant, and the amount involved exceeds $120,000, and in which any related party had or will have a direct or indirect
material interest. At the discretion of the Board, a proposed related party transaction may generally be reviewed by the Board in
its entirety or by a “conflicts committee” meeting the definitional requirements for such a committee under our partnership
agreement. After appropriate review, the Board or the Conflicts Committee may approve or ratify a related party transaction if
such transaction is consistent with the Related Party Transaction Policy and is on terms that, taken as a whole, are no less
favorable to us than could be obtained in an arm’s-length transaction with an unrelated third-party, unless the Board or the
Conflicts Committee otherwise determines that the transaction is not in our best interests. Related party transactions involving
compensation will be approved by the Board in its entirety or by the Compensation Committee of the Board in lieu of the
Conflicts Committee.
Director Independence
The NYSE does not require a listed publicly traded partnership, such as ours, to have a majority of independent directors
on the Board of our General Partner. The Board consists of six directors, three of whom the Board has affirmatively determined
are independent in accordance with the rules of the NYSE. For a discussion of the independence of the Board, please see Part
III, Item 10. Directors, Executive Officers and Corporate Governance.
Item 14. Principal Accounting Fees and Services
Grant Thornton has served as the Partnership’s independent public registered accounting firm since August 2013. The
Audit Committee has not selected the independent registered public accounting firm to conduct the audit of our books and
records for the fiscal year ending December 31, 2024.
The charter of the Audit Committee of the Board, which is available on our website at www.CVRPartners.com, requires
the Audit Committee to pre-approve all audit services and non-audit services (other than de-minimis non-audit services as
defined by the Sarbanes-Oxley Act of 2002) to be provided by our independent registered public accounting firm. The Audit
Committee has a pre-approval policy with respect to services that may be performed by the independent auditors. The Audit
Committee pre-approved all fees incurred in fiscal year 2023.
December 31, 2023 | 109
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The following table represents fees billed and expected to be billed for professional services and other services in the
following categories and amounts by Grant Thornton for the fiscal years ended December 31, 2023 and 2022:
(in thousands)
Audit fees (1)
Audit-related fees
Tax fees
All other fees
Total
Year Ended December 31,
2023
2022
$
706 $
711
—
—
—
—
—
—
$
706 $
711
(1) Represents the aggregate fees for professional services rendered for the annual audit of the Partnership’s financial statements, the annual
audit of the effectiveness of the Partnership’s internal control over financial reporting, comfort letters, consents, and consultations on
financial accounting and reporting standards arising during the course of the audits and reviews. Also includes the review of the
consolidated financial statements included in the Partnership’s quarterly reports on Form 10-Q.
December 31, 2023 | 110
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Item 15. Exhibits, Financial Statement Schedules
(a)(1) Financial Statements - See Part II, Item 8 of this Annual Report on Form 10-K.
PART IV
(a)(2) Financial Statement Schedules - All schedules for which provision is made in the applicable accounting regulations
of the Securities and Exchange Commission (the “SEC”) are not required under the related instructions or are inapplicable and
therefore have been omitted.
(a)(3) Exhibits
Exhibit
Number
Exhibit Description
INDEX TO EXHIBITS
3.1**
3.2**
4.1**
4.2**
4.3**
4.4**
4.5**
10.1**
10.1.1**
10.1.2**
10.2**
10.3**
10.4**
Third Amended and Restated Limited Liability Company Agreement of CVR GP, LLC, dated April 13, 2011
(incorporated by reference to Exhibit 3.4 of the Form 10-K filed on February 24, 2012).
Composite copy of the Second Amended and Restated Agreement of Limited Partnership of CVR Partners, LP
(as amended by Amendment No. 1 effective January 1, 2018) (incorporated by reference to Exhibit 3.2 of the
Form 10-Q filed on April 26, 2018).
Description of Common Units (incorporated by reference to Exhibit 4.1 of the Form 10-K filed on February
20, 2020).
Specimen certificate for the common units (incorporated by reference to Appendix A to the Prospectus
contained within the Form S-1/A filed on March 17, 2011).
Amended and Restated Registration Rights Agreement, dated as of April 13, 2011, by and between CVR
Partners, LP and Coffeyville Resources, LLC (incorporated by reference to Exhibit 10.6 of the Form 8-K/A
filed by CVR Energy, Inc. on May 23, 2011 (Commission File No. 001-33492)).
Indenture, dated as of June 23, 2021, among CVR Partners, LP, CVR Nitrogen Finance Corporation, the
Guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral trustee
(incorporated by reference to Exhibit 4.1 of the Form 8-K filed on June 23, 2021).
Form of 6.125% Senior Secured Note due 2028 (incorporated by reference to Exhibit 4.2 of the Form 8-K filed
on June 23, 2021).
Environmental Agreement, dated as of October 25, 2007, by and between Coffeyville Resources Refining &
Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers, LLC (incorporated by reference to
Exhibit 10.7 of the Form 10-Q filed by CVR Energy, Inc. on December 6, 2007 (Commission File No.
001-33492)).
Supplement to Environmental Agreement, dated as of February 15, 2008, by and between Coffeyville
Resources Refining & Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers, LLC (incorporated by
reference to Exhibit 10.17.1 of the Form 10-K filed by CVR Energy, Inc. on March 28, 2008 (Commission
File No. 001-33492)).
Second Supplement to Environmental Agreement, dated as of July 23, 2008, by and between Coffeyville
Resources Refining & Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers, LLC (incorporated by
reference to Exhibit 10.1 of the Form 10-Q filed by CVR Energy, Inc. on August 14, 2008 (Commission File
No. 001-33492)).
Amended and Restated Omnibus Agreement, dated as of April 13, 2011, among CVR Energy, Inc.,
CVR GP, LLC and CVR Partners, LP (incorporated by reference to Exhibit 10.2 of the Form 8-K/A filed by
CVR Energy, Inc. on May 23, 2011 (Commission File No. 001-33492)).
Lease and Operating Agreement, dated as of May 4, 2012, by and between Coffeyville Resources
Terminal, LLC and Coffeyville Resources Nitrogen Fertilizers, LLC (incorporated by reference to Exhibit 10.2
of the Form 10-Q filed on August 2, 2012).
Master Service Agreement among Coffeyville Resources Refining & Marketing, LLC and Coffeyville
Resources Nitrogen Fertilizers, LLC, dated February 19, 2020 (incorporated by reference to Exhibit 10.13 of
the Form 10-K filed on February 20, 2020).
December 31, 2023 | 111
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10.5**
10.5.1**
10.6**+
10.6.1**+
10.6.2**+
10.6.3**+
10.6.4**+
10.7**+
10.8**
10.9**+
10.10**
10.11**
10.12**
10.13**
10.13.1**
10.14**+^
10.15**+^
Master Service Agreement among CVR Services, LLC and subsidiaries of CVR Energy, dated February 19,
2020 (incorporated by reference to Exhibit 10.14 of the Form 10-K filed on February 20, 2020).
Amendment to Master Service Agreement, dated as of April 12, 2022, among CVR Services, LLC and the
Partnership and its subsidiaries (incorporated by reference to Exhibit 10.6 of the Form 10-Q filed on May 3,
2022).
CVR Partners, LP Long-Term Incentive Plan (adopted March 16, 2011) (incorporated by reference to
Exhibit 10.1 to the Form S-8 filed on April 12, 2011).
Form of CVR Partners, LP Long-Term Incentive Plan Employee Phantom Unit Agreement (Executive)
(incorporated by reference to Exhibit 10.15.2 of the Form 10-K filed on February 20, 2020).
Form of CVR Partners, LP Long-Term Incentive Plan Employee Phantom Unit Agreement (incorporated by
reference to Exhibit 10.15.3 of the Form 10-K filed on February 20, 2020).
Form of CVR Partners, LP Long-Term Incentive Plan Employee Phantom Unit Agreement (Executive)
(incorporated by reference to Exhibit 10.7.4 of the Form 10-K filed on February 23, 2022).
Form of CVR Partners, LP Long-Term Incentive Plan Employee Phantom Unit Agreement (incorporated by
reference to Exhibit 10.7.5 of the Form 10-K filed on February 23, 2022).
Performance Unit Award Agreement, dated as of November 1, 2017, by and between CVR Energy, Inc. and
David L. Lamp (incorporated by reference to Exhibit 10.22 to the Partnership’s Form 10-K filed on
February 23, 2018 (Commission File No. 001-35120)).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.26 of the Form 10-K filed on
February 24, 2012).
CVR Energy, Inc. Change in Control and Severance Plan, as amended effective January 1, 2022 (incorporated
by reference to Exhibit 10.11.1 of the Form 10-K filed on February 23, 2022).
Collateral Trust Agreement, dated as of June 10, 2016, among CVR Partners, LP, CVR Nitrogen Finance
Corporation, the Guarantors (as defined therein) and Wilmington Trust, National Association, as Trustee and
Collateral Trustee (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on June 16, 2016).
Parity Lien Security Agreement, dated as of June 10, 2016, among CVR Partners, LP, CVR Nitrogen Finance
Corporation, the Guarantors (as defined therein) and Wilmington Trust, National Association, as Trustee and
Collateral Trustee (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on June 16, 2016).
Intercreditor Agreement, dated as of September 30, 2016, among CVR Partners, LP, CVR Nitrogen, LP, East
Dubuque Nitrogen Fertilizers, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, CVR Nitrogen
Holdings, LLC, CVR Nitrogen Finance Corporation, CVR Nitrogen GP, LLC, certain of their affiliates from
time to time party thereto, UBS AG, Stamford Branch, as administrative agent and collateral agent for the
secured parties, Wilmington Trust, National Association, as trustee and collateral trustee for the secured parties
in respect of the outstanding senior secured notes and other parity lien obligations and other parity lien
representative from time to time party thereto (incorporated by reference to Exhibit 10.3 of the Form 8-K filed
on October 6, 2016).
On-Site Product Supply Agreement among Coffeyville Resources Nitrogen Fertilizers, LLC and Messer LLC
dated as of July 31, 2020 (incorporated by reference to Exhibit 10.1 of the Form 10-Q filed on August 4,
2020).
Amendment No. 1 to On-Site Product Supply Agreement among Coffeyville Resources Nitrogen Fertilizers,
LLC and Messer LLC dated as of February 21, 2022 (incorporated by reference to Exhibit 10.17.1 of the Form
10-K filed on February 23, 2022).
CVR Partners, LP 2021 Performance-Based Bonus Plan, approved February 19, 2021 (incorporated by
reference to Exhibit 10.27 of the Form 10-K filed on February 23, 2021).
CVR Partners, LP 2022 Performance-Based Bonus Plan, approved February 21, 2022 (incorporated by
reference to Exhibit 10.5 of the Form 10-Q filed on May 3, 2022).
10.16*+^
CVR Partners, LP and Subsidiaries 2023 Performance-Based Bonus Plan - FERTILIZER, approved February
17, 2023 (incorporated by reference to Exhibit 10.1 of the Form 10-Q filed on May 2, 2023.
10.17**
Collateral Trust Joinder, dated as of June 23, 2021, among CVR Partners, LP, CVR Nitrogen Finance
Corporation, the Guarantors party thereto and Wilmington Trust, National Association, as trustee and
collateral trustee (incorporated by reference to Exhibit 10.3 of the Form 8-K filed on June 23, 2021).
December 31, 2023 | 112
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10.18**
10.19**^
The Joinder Agreement (Other Parity Lien Obligations), dated as of June 23, 2021, among Wilmington Trust,
National Association, as an other parity obligations representative, UBS AG, Stamford Branch, as collateral
agent under the Existing ABL Facility, Wilmington Trust, National Association, as applicable parity lien
representative, Wilmington Trust, National Association, as parity lien collateral trustee and CVR Partners, LP
(incorporated by reference to Exhibit 10.4 of the Form 8-K filed on June 23, 2021).
Credit Agreement, dated as of September 30, 2021, among CVR Partners, LP, CVR Nitrogen, LP, East
Dubuque Nitrogen Fertilizers, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, CVR Nitrogen
Holdings, LLC, CVR Nitrogen Finance Corporation, CVR Nitrogen GP, LLC, certain of their subsidiaries
from time to time party thereto, the lenders from time to time party thereto and Wells Fargo Bank, National
Association, a national banking association, as administrative agent and collateral agent (incorporated by
reference to Exhibit 10.1 of the Form 8-K filed on September 30, 2021).
10.19.1**^ Amendment No. 1 to Credit Agreement dated September 26, 2023, among CVR Partners, LP, CVR Nitrogen,
LP, East Dubuque Nitrogen Fertilizers, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, CVR Nitrogen
Holdings, LLC, CVR Nitrogen Finance Corporation, CVR Nitrogen GP, LLC, certain of their subsidiaries
from time to time party thereto, the lenders from time to time party thereto and Wells Fargo Bank National
Association, a national banking association, as administrative agent and collateral agent (incorporated by
reference to Exhibit 10.1 to the Partnership’s Form 8-K filed on September 27, 2023).
10.20**
10.21**
Guaranty and Security Agreement, dated as of September 30, 2021, among CVR Partners, LP, CVR Nitrogen,
LP, East Dubuque Nitrogen Fertilizers, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, CVR Nitrogen
Holdings, LLC, CVR Nitrogen Finance Corporation, CVR Nitrogen GP, LLC, certain of their subsidiaries
from time to time party thereto, and Wells Fargo Bank, National Association, a national banking association,
as administrative agent and collateral agent (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on
September 30, 2021).
Joinder Agreement (Other Parity Lien Obligations), dated as of September 30, 2021, among Wilmington Trust,
National Association (“WTNA”), as an other applicable parity obligations representative, UBS AG, Stamford
Branch (“UBS”), as collateral agent under the existing ABL Facility, WTNA, as applicable parity lien
representative, WTNA, as parity lien collateral trustee, Wells Fargo, as collateral agent under the ABL Credit
Facility and CVR Partners (on behalf of itself and its subsidiaries) to that certain intercreditor agreement dated
as of September 30, 2016 (as amended, supplemented or otherwise modified to date), among the Credit
Parties, certain of their subsidiaries from time to time party thereto, UBS as trustee and collateral trustee for
the secured parties in respect of the outstanding senior secured notes and other parity lien obligations and other
parity lien representative from time to time party thereto (incorporated by reference to Exhibit 10.3 of the
Form 8-K filed on September 30, 2021).
10.22**+
10.23**+
Employment Agreement, dated as of December 22, 2021, by and between CVR Energy, Inc. and David L.
Lamp (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on December 27, 2021).
Amendment to Performance Unit Award Agreement, dated as of December 22, 2021, by and between CVR
Energy, Inc. and David L. Lamp (incorporated by reference to Exhibit 10.2 of the Form 8-K filed on
December 27, 2021).
10.24**Õ^ Amended and Restated Limited Liability Company Agreement of CVR-CapturePoint LLC (incorporated by
reference to Exhibit 10.2 of the Form 10-Q filed on May 2, 2023).
10.25**Õ^
Transaction Agreement dated January 6, 2023 by and among CVR Partners, LP and certain of its subsidiaries,
CVR-CapturePoint Parent LLC, CapturePoint LLC and certain Investors relating to the purchase of
membership interests in CVR-CapturePoint LLC (incorporated by reference to Exhibit 10.3 of the Form 10-Q
filed on May 2, 2023).
21.1*
23.1*
31.1*
31.2*
31.3*
31.4*
32.1†
List of Subsidiaries of CVR Partners, LP
Consent of Grant Thornton LLP.
Rule 13a-14(a) or 15(d)-14(a) Certification of Executive Chairman.
Rule 13a-14(a) or 15(d)-14(a) Certification of President and Chief Executive Officer.
Rule 13a-14(a) or 15(d)-14(a) Certification of Executive Vice President and Chief Financial Officer.
Rule 13a-14(a) or 15(d)-14(a) Certification of Chief Accounting Officer and Corporate Controller.
Section 1350 Certification of Executive Chairman, President and Chief Executive Officer, Executive Vice
President and Chief Financial Officer and Chief Accounting Officer and Corporate Controller.
December 31, 2023 | 113
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97.1*+
101*
CVR Partners, LP Policy for the Recovery of Erroneously Awarded Compensation effective October 2, 2023.
The following financial information for CVR Partners, LP’s Annual Report on Form 10-K for the year ended
December 31, 2023, formatted in Inline XBRL (“Extensible Business Reporting Language”) includes:
(1) Consolidated Balance Sheets, (2) Consolidated Statements of Operations, (3) Consolidated Statements of
Comprehensive Income (Loss), (4) Consolidated Statement of Partners’ Capital, (5) Consolidated Statements
of Cash Flows and (6) the Notes to Consolidated Financial Statements, tagged as blocks of text. The instance
document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline
XBRL document.
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
**
†
+
Õ
^
Filed herewith.
Previously filed.
Furnished herewith.
Denotes management contract or compensatory plan or arrangement.
The exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be provided to
the Securities and Exchange Commission upon request.
Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Partnership
agrees to furnish supplementally an unredacted copy of this exhibit to the SEC upon request.
PLEASE NOTE: Pursuant to the rules and regulations of the SEC, we may file or incorporate by reference agreements
referenced as exhibits to the reports that we file with or furnish to the SEC. The agreements are filed to provide investors with
information regarding their respective terms. The agreements are not intended to provide any other factual information about
the Partnership or its business or operations. In particular, the assertions embodied in any representations, warranties and
covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from
those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the
exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the
representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and
covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing
matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may
have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in the
Partnership’s public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the
agreements as characterizations of the actual state of facts about the Partnership or its business or operations on the date hereof.
Item 16. Form 10-K Summary
None.
December 31, 2023 | 114
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
CVR Partners, LP
By: CVR GP, LLC, its general partner
By:
/s/ MARK A. PYTOSH
Mark A. Pytosh
President and Chief Executive Officer
Date: February 21, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report had been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ DAVID L. LAMP
David L. Lamp
/s/ MARK A. PYTOSH
Mark A. Pytosh
/s/ DANE J. NEUMANN
Dane J. Neumann
/s/ JEFFREY D. CONAWAY
Jeffrey D. Conaway
/s/ JORDAN BLEZNICK
Jordan Bleznick
/s/ DONNA R. ECTON
Donna R. Ecton
/s/ FRANK M. MULLER, JR.
Frank M. Muller, Jr.
/s/ PETER K. SHEA
Peter K. Shea
Director and Executive Chairman
(Principal Executive Officer)
February 21, 2024
Director, President and Chief Executive Officer
(Principal Executive Officer)
February 21, 2024
Executive Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary
(Principal Financial Officer)
February 21, 2024
Vice President, Chief Accounting Officer and Corporate
Controller
(Principal Accounting Officer)
February 21, 2024
Chairman of the Board of Directors
February 21, 2024
Director
Director
Director
February 21, 2024
February 21, 2024
February 21, 2024
December 31, 2023 | 115