CVR PARTNERS, LP Q1 FY2025 earnings call

• Financial highlights: Net sales of $143 million, net income of $27 million, EBITDA of $53 million, and a first - quarter distribution of $2.26 per common unit declared. - Facility operation: Consolidated ammonia plant utilization was 101% in the first quarter of 2025. - Production and sales: Combined ammonia production was 216,000 gross tons with 64,000 net tons available for sale, UAN production was 348,000 tons; sold ~336,000 tons of UAN at $256 per ton and ~60,000 tons of ammonia at $554 per ton. - Price trends: Ammonia prices increased 5% from prior year due to earlier shipments, UAN prices declined 4% due to delayed shipments. - Capital projects: Spent $6 million on capital projects in the first quarter, estimated total capital spending for 2025 to be $50 - $60 million, with $40 - $45 million as maintenance capital. - Facility projects: Focused on detailed design of infrastructure to utilize natural gas as alternative feedstock at Coffeyville, executing debottlenecking projects at plants, planning nitrous oxide abatement unit at Coffeyville plant during fall 2025 turnaround.

For the first quarter of 2025, CVR Partners reported net sales of $143 million. Ammonia production for the first quarter was 216,000 gross tons, with 64,000 net tons available for sale. UAN production was 348,000 tons. Approximately 336,000 tons of UAN were sold at an average price of $256 per ton, and approximately 60,000 tons of ammonia were sold at an average price of $554 per ton. Net income for the quarter was $27 million, or $2.56 per common unit, and EBITDA was $53 million.

• Second quarter 2025: Estimated ammonia utilization rate to be between 93% and 97% with some downtime planned at East Dubuque; direct operating expenses, excluding inventory impacts, expected to be between $57 million and $62 million; total capital spending expected to be between $18 million and $22 million. - 2025 outlook: Expect 2025 to be a continued period of higher than historical volatility; total capital spending for 2025 estimated at $50 - $60 million, with $40 - $45 million as maintenance capital; profit and gross capital spending planned for 2025 to be funded through cash reserves taken over past two years.

• Tariffs: Extended tariffs on fertilizer could lead to higher domestic prices; tariffs on capital equipment and chemicals are impacting vendors by raising prices, adding surcharges, and lengthening delivery schedules. - Geopolitical risks: Significant production capacity in Middle East, North Africa, and Russia represents a wild card for the nitrogen fertilizer industry. - Europe natural gas: Concerns around Europe's ability to replenish natural gas inventories before winter 2025 persist due to supply constraints; cost to produce ammonia in Europe remains at the high end of the global cost curve.

Q: Can you just discuss the step down from the first quarter utilization rates a little more in - depth?

A: The biggest driver is installing a new control system in the reformer at the East Dubuque facility, having to take down several compressors to install it, which is a reliability project.

Q: Can you give us the status on potential growth projects or how much gross ammonia production will be expanded?

A: Several projects target issues generating downtime, expected to reduce downtime and increase production by several percentage points; also looking at potentially expanding nameplate capacity at both facilities over two to three years.

Q: Can you give us a more refined cost estimate for the Coffeeville natgas or petco project?

A: Not done yet, but it's a low double - digit millions kind of number, technically comfortable with feeding natural gas and looking at additional hydrogen sources.

Q: Should we expect more additional reserves in the category relating to future operating needs?

A: Reserving for cash flows in the future, wanting to make sure the cash for growth projects is available, subject to board approval.

Q: Should we look forward to more robust pricing in the second quarter for UAN?

A: The second quarter will be reflective of closer to the current market, prices have escalated since December and prospects look good for summer fill season.

Q: Give your perspective on the pricing divergence between urea and ammonia?

A: Tampa ammonia contract not a good representation of Midwest market; spreads widened off Tampa price, but our ammonia price in spring was reflective of urea and UAN market, with supply - demand tight in US.

Q: How do you think China pulling back on buying corn impacts American farmers?

A: Bigger issue for corn is Mexico, China is big buyer of soybeans, US soybeans may find different markets, and global inventories of soybeans and corn are still low.