For the transition period from to .

Delaware

56-2677689

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer

Identification No.)

2277 Plaza Drive, Suite 500,, Sugar Land,, Texas77479

(Address of principal executive offices) (Zip Code)

(~~281~~) (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	The New York Stock Exchange

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

☐

Accelerated filer

☑

Non-Accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 113,282,973 common units representing limited partner interests of CVR Partners, LP (“common units”) outstanding at ~~October 22, 2019.~~

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Important Information Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (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 2. 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 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 ~~including~~statements, include, but are not limited ~~to:~~to, the following:

•our ability to make cash distributions on our common units;

•the volatile nature of our business and the variable nature of our distributions;

•the severity, magnitude, duration, and impact of the novel coronavirus 2019 (“COVID-19”) pandemic and of businesses’ and governments’ responses to such pandemic on our operations, personnel, commercial activity, and supply and demand across our and our customers’ and suppliers’ businesses;

•changes in market conditions and market volatility arising from the COVID-19 pandemic, including fertilizer, natural gas, and other commodity prices and the impact of such changes on our operating results and financial position;

•the ability of our general partner to modify or revoke our distribution policy at any time;

~~volatile margins~~•the cyclical and seasonal nature of our business;

•the impact of weather on our business including our ability to produce, market, or sell fertilizer products profitably or at all;

•the dependence of our operations on a few third-party suppliers, including providers of transportation services, and equipment;

•our reliance on, or our ability to procure economically or at all, pet coke we purchase from CVR Energy, Inc. (together with its subsidiaries, but excluding the Partnership and its subsidiaries, “CVR Energy”) and third-party suppliers or 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 and price levels of essential raw materials;

•our production levels, including the risk of a material decline in those levels;

•accidents or other unscheduled shutdowns or interruptions affecting our facilities, machinery, or equipment, or those of our suppliers or customers;

•potential operating hazards from accidents, fire, severe weather, tornadoes, floods or other natural disasters

•our ability to obtain, retain, or renew permits, licenses and authorizations to operate our business;

•competition in the nitrogen fertilizer ~~industry~~businesses including potential impacts of domestic and ~~exposure~~global supply and demand;

•capital expenditures;

•existing and future laws, rulings and regulations, including but not limited to ~~risks associated with~~those relating to the ~~pricing~~environment, climate change, and/or the transportation or production of hazardous chemicals like ammonia, including potential liabilities or capital requirements arising from such laws, rulings, or regulations;

•alternative energy or fuel sources, and ~~availability of feedstocks, pet coke, utilities, urea ammonium nitrate (“UAN”), ammonia, natural gas and other products;~~

~~the availability of adequate cash, credit and other sources of liquidity including volatility in the capital and credit markets and changes to our capital requirements;~~

~~changes in the expected value of, benefits derived from, and our ability to successfully implement, business strategies, transactions, turnarounds, maintenance and capital projects;~~

changes in (and in the application of) local, state and federal laws, rules, regulations and policies, including with respect to environmental matters (including climate change), health and safety, exports, transportation (including pipeline and trucking transportation), the end-use and application of ~~fertilizers and taxes (including~~fertilizers;

•risks of terrorism, cybersecurity attacks, the ~~tax status~~security of ~~CVR Partners);~~

~~changes in economic conditions impacting our business and the business of our suppliers, customers, counterparties and lenders;~~

~~interruption of or changes in the cost, availability or regulation of pipelines, vessels, trucks~~chemical manufacturing facilities and other ~~means~~matters beyond our control;

•our lack of ~~transporting feedstocks, pet coke, UAN, ammonia and other products relating to~~ asset diversification;

•our ~~business;~~

~~changes in competition in the nitrogen fertilizer business including to our competitive advantages;~~

~~the cyclical and/or seasonal nature of the nitrogen fertilizer business;~~

~~weather conditions, fires, tornadoes, floods or other natural disasters affecting our operations or the areas in which our feedstocks and fertilizers are marketed or sold;~~

~~risks associated with governmental policies affecting the agricultural industry;~~

~~direct or indirect effects from actual or threatened terrorist incidents, security or cyber-security breaches or acts of war;~~

dependence on significant customers ~~and suppliers~~ and the creditworthiness and performance by counterparties;

•our ~~ability~~potential loss of transportation cost advantage over our competitors;

•our partial dependence on customers and distributors, including to ~~license the technology used in~~transport goods and equipment;

•risks associated with third party operation of or ~~secure permits required~~control over important facilities necessary for ~~our operations;~~

~~adverse rulings, judgments or settlements in litigation or other legal or tax matters, including unexpected environmental remediation costs in excess of any reserves;~~

~~competition with CVR Energy, Inc. and its affiliates (“CVR Energy”), control~~operation of our ~~general partner by CVR Energy~~nitrogen fertilizer facilities;

•The volatile nature of ammonia, potential liability for accidents involving ammonia including damage or injury to 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 senior management team ~~including~~and conflicts of interest they may face operating each of CVR Partners and CVR Energy;

~~operating hazards and interruptions~~•control of our general partner by CVR Energy;

•our ability to continue to license the technology used in our operations;

•restrictions in our debt agreements;

March 31, 2020 | 3

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•risks associated with noncompliance with continued listing standards of the New York Stock Exchange (“NYSE”) including potential suspension or ~~production declines, including unscheduled maintenance or downtime~~delisting and the ~~availability~~impacts thereof on our common unit price, valuation, access to capital or liquidity;

•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 ~~recoverability of adequate~~volatility in the capital and credit markets;

•competition with CVR Energy and its affiliates;

•our ability to recover under our insurance ~~coverage;~~policies for damages or losses in full or at all; and

•the factors described in greater detail under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 and this Report and our other filings with the Securities and Exchange ~~Commission.~~

Commission (the “SEC”).

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.

~~September 30, 2019~~March 31, 2020 | 34

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CVR PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(in thousands)	March 31, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	58,014	$	36,994
Accounts receivable	14,868		34,264
Inventories	55,092		48,296
Prepaid expenses and other current assets	5,266		5,406
Total current assets	133,240		124,960
Property, plant, and equipment, net	940,328		951,959

Goodwill	40,969		40,969
Other long-term assets	19,437		20,067
Total assets	$	1,133,974	$	1,137,955

LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable	$	22,500	$	21,069
Accounts payable to affiliates	1,585		2,578
Deferred revenue	37,634		27,841
Other current liabilities	30,863		24,043
Total current liabilities	92,582		75,531
Long-term liabilities:
Long-term debt	633,315		632,406
Other long-term liabilities	9,384		10,474
Total long-term liabilities	642,699		642,880
Commitments and contingencies (See Note 11)
Partners’ capital:
Common unitholders, 113,282,973 units issued and outstanding at March 31, 2020 and December 31, 2019	398,692		419,543
General partner interest	1		1
Total partners’ capital	398,693		419,544
Total liabilities and partners’ capital	$	1,133,974	$	1,137,955

(in thousands) September 30, 2019 December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 83,667
$ 61,776
Accounts receivable 14,909
61,662
Inventories 56,864
63,554
Prepaid expenses and other current assets 4,608
6,989
Total current assets 160,048
193,981
Property, plant, and equipment, net 964,502
1,015,240
Goodwill 40,969
40,969
Other long-term assets 14,803
4,198
Total assets $ 1,180,322
$ 1,254,388
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable $ 29,389
$ 26,789
Accounts payable to affiliates 2,131
2,976
Deferred revenue 16,448
68,804
Other current liabilities 36,687
24,066
Total current liabilities 84,655
122,635
Long-term debt 631,520
628,989
Other long-term liabilities 11,791
2,938
Total long-term liabilities 643,311
631,927
Commitments and contingencies (see Note 11)

Partners’ capital:
Common unitholders, 113,282,973 units issued and outstanding at September 30, 2019 and December 31, 2018 452,355
499,825
General partner interest 1
1
Total partners’ capital 452,356
499,826
Total liabilities and partners’ capital $ 1,180,322
$ 1,254,388

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

~~September 30, 2019~~March 31, 2020 | 45

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CVR PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended March 31,
(in thousands, except unit data)	2020		2019
Net sales	$	75,080	$	91,873
Operating costs and expenses:
Cost of materials and other	23,991		23,730
Direct operating expenses (exclusive of depreciation and amortization)	35,123		34,820
Depreciation and amortization	15,597		16,584
Cost of sales	74,711		75,134
Selling, general and administrative expenses	5,354		6,846
(Gain) loss on asset disposals	(13)		454
Operating (loss) income	(4,972)		9,439
Other (expense) income:
Interest expense, net	(15,783)		(15,650)
Other income, net	27		20
Loss before income taxes	(20,728)		(6,191)
Income tax expense (benefit)	7		(112)
Net loss	$	(20,735)	$	(6,079)

Basic and diluted loss per unit data	$	(0.18)	$	(0.05)
Distributions declared and paid per common unit	$	—	$	0.12

Weighted-average common units outstanding:
Basic and Diluted	113,283		113,283

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands, except unit data) 2019 2018 2019 2018
Net sales $ 88,582
$ 79,909
$ 318,115
$ 252,965
Operating costs and expenses:
Cost of materials and other 21,617
19,590
71,347
61,198
Direct operating expenses (exclusive of depreciation and amortization) 47,554
35,334
128,004
121,468
Depreciation and amortization 18,418
16,035
60,032
52,866
Cost of sales 87,589
70,959
259,383
235,532
Selling, general and administrative expenses 6,326
6,393
19,637
18,955
Loss on asset disposals 2,184
28
2,629
160
Operating (loss) income (7,517 ) 2,529
36,466
(1,682 )
Other (expense) income:
Interest expense, net (15,621 ) (15,693 ) (46,870 ) (47,080 )
Other income, net 174
30
229
100
Net loss before income taxes (22,964 ) (13,134 ) (10,175 ) (48,662 )
Income tax expense (benefit) 12
12
(88 ) (6 )
Net loss $ (22,976 ) $ (13,146 ) $ (10,087 ) $ (48,656 )

Basic and diluted loss per unit data $ (0.20 ) $ (0.12 ) $ (0.09 ) $ (0.43 )
Distributions declared per unit $ 0.14
$ —
$ 0.33
$ —

Weighted-average common units outstanding:
Basic and Diluted 113,283
113,283
113,283
113,283

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

~~September 30, 2019~~March 31, 2020 | 56

Table of Contents

CVR PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(unaudited)


	Common Units					General Partner Interest			Total Partners’ Capital
(in thousands, except unit data)	Issued	Amount
Balance at December 31, 2019	113,282,973	$	419,543	$	1		$	419,544


Land exchange with affiliate	—	(116)		—			(116)
Net loss	—	(20,735)		—			(20,735)
Balance at March 31, 2020	113,282,973	$	398,692	$	1		$	398,693

Common Units
General
Partner
Interest
Total Partners’ Capital
(in thousands, except unit data) Issued Amount
Balance at December 31, 2018 113,282,973
$ 499,825
$ 1
$ 499,826
Cash distributions to common unitholders - Affiliates —
(4,670 ) —
(4,670 )
Cash distributions to common unitholders - Non-affiliates —
(8,924 ) —
(8,924 )
Net loss —
(6,079 ) —
(6,079 )
Balance at March 31, 2019 113,282,973
$ 480,152
$ 1
$ 480,153
Cash distributions to common unitholders - Affiliates —
(2,724 ) —
(2,724 )
Cash distributions to common unitholders - Non-affiliates —
(5,205 ) —
(5,205 )
Net income —
18,968
—
18,968
Balance at June 30, 2019 113,282,973
$ 491,191
$ 1
$ 491,192
Cash distributions to common unitholders - Affiliates —
(5,449 ) —
(5,449 )
Cash distributions to common unitholders - Non-affiliates —
(10,411 ) —
(10,411 )
Net loss —
(22,976 ) —
(22,976 )
Balance at September 30, 2019 113,282,973
$ 452,355
$ 1
$ 452,356


	Common Units					General Partner Interest			Total Partners’ Capital
(in thousands, except unit data)	Issued	Amount
Balance at December 31, 2018	113,282,973	$	499,825	$	1		$	499,826
Cash distributions to common unitholders - Affiliates	—	(4,670)		—			(4,670)
Cash distributions to common unitholders - Non-affiliates	—	(8,924)		—			(8,924)
Net loss	—	(6,079)		—			(6,079)
Balance at March 31, 2019	113,282,973	$	480,152	$	1		$	480,153

Common Units General
Partner
Interest Total Partners’ Capital
(in thousands, except unit data) Issued Amount
Balance at December 31, 2017 113,282,973
$ 549,852
$ 1
$ 549,853
Net loss —
(19,051 ) —
(19,051 )
Balance at March 31, 2018 113,282,973
$ 530,801
$ 1
$ 530,802
Net loss —
(16,459 ) —
(16,459 )
Balance at June 30, 2018 113,282,973
$ 514,342
$ 1
$ 514,343
Net loss —
(13,146 ) —
(13,146 )
Balance at September 30, 2018 113,282,973
$ 501,196
$ 1
$ 501,197

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

~~September 30, 2019~~March 31, 2020 | 67

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CVR PARTNERS, LP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended March 31,
(in thousands)	2020		2019
Cash flows from operating activities:
Net loss	$	(20,735)	$	(6,079)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	15,597		16,584


Share-based compensation	(477)		1,108
Other adjustments	1,262		1,212
Change in assets and liabilities:
Current assets and liabilities	32,645		38,253
Non-current assets and liabilities	(585)		846
Net cash provided by operating activities	27,707		51,924
Cash flows from investing activities:
Capital expenditures	(6,710)		(3,500)

Proceeds from sale of assets	48		—
Net cash used in investing activities	(6,662)		(3,500)
Cash flows from financing activities:
Cash distributions to common unitholders - Affiliates	—		(4,670)
Cash distributions to common unitholders - Non-affiliates	—		(8,924)
Other financing activities	(25)		—
Net cash used in financing activities	(25)		(13,594)
Net increase in cash and cash equivalents	21,020		34,830
Cash and cash equivalents, beginning of period	36,994		61,776
Cash and cash equivalents, end of period	$	58,014	$	96,606

Nine Months Ended September 30,
(in thousands) 2019 2018
Cash flows from operating activities:
Net loss $ (10,087 ) $ (48,656 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 60,032
52,866
Share-based compensation 2,970
2,695
Other adjustments 5,256
2,640
Change in assets and liabilities:
Current assets and liabilities 9,283
16,490
Non-current assets and liabilities 1,218
1,083
Net cash provided by operating activities 68,672
27,118
Cash flows from investing activities:
Capital expenditures (9,487 ) (15,022 )
Proceeds from sale of assets 89
172
Net cash used in investing activities (9,398 ) (14,850 )
Cash flows from financing activities:
Cash distributions to common unitholders - Affiliates (12,843 ) —
Cash distributions to common unitholders - Non-affiliates (24,540 ) —
Net cash used in financing activities (37,383 ) —
Net increase in cash and cash equivalents 21,891
12,268
Cash and cash equivalents, beginning of period 61,776
49,173
Cash and cash equivalents, end of period $ 83,667
$ 61,441

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

~~September 30, 2019~~March 31, 2020 | 78

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) Organization and Nature of Business

CVR Partners, LP (referred to as “CVR Partners” or the “Partnership”) is a Delaware limited partnership and 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 2 manufacturing facilities, which are located in Coffeyville, Kansas (the “Coffeyville Facility”) and East Dubuque, Illinois (the “East Dubuque Facility”). Both facilities manufacture ammonia and are able to further upgrade 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 ~~Coffeyville Facility sells and distributes products to destinations located principally~~Partnership’s product sales are sold on a wholesale basis in the ~~Union Pacific railroad, the BNSF Railway railroad, or as direct shipments to customers, while the East Dubuque Facility primarily sells to customers located within 200 miles~~United States of ~~the facility.~~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.

The Partnership’s common units are listed on the New York Stock Exchange (“NYSE”) under the symbol “UAN.” On April 20, 2020, the average closing price of the Partnership’s common units over a 30 consecutive trading-day period had fallen below $1.00 per share, resulting in noncompliance with the continued listing compliance standards in Section 802.01C of the NYSE Listing Company Manual. The Partnership received written notification of this noncompliance from the NYSE on April 22, 2020, and currently has until January 1, 2021 to regain compliance or be subject to the NYSE’s suspension and delisting procedures. See the Form 8-K filed by the Partnership with the SEC on April 24, 2020 for further discussion.

As of ~~September 30, 2019,~~March 31, 2020, public security holders held approximately 66% of the Partnership’s outstanding limited partner interests and Coffeyville Resources, LLC (“CRLLC”), a wholly-owned subsidiary of CVR Energy, held approximately 34% of the Partnership’s outstanding limited partner interests and 100% of the Partnership’s general partner interest is held by CVR GP, LLC (“CVR GP” or the “general partner”), a wholly owned subsidiary of CVR Energy. As of ~~September 30, 2019,~~March 31, 2020, Icahn Enterprises L.P. (“IEP”) and its affiliates owned approximately 71% of the common stock of CVR Energy.

Unit Repurchase Program

On May 6, 2020, the board of directors of the Partnership’s general partner authorized a unit repurchase program (the “Unit Repurchase Program”). The Unit Repurchase Program enables the Partnership to repurchase up to $10 million of the Partnership’s common units. Repurchases under the Unit Repurchase Program may be made from time-to-time through open market transactions, block trades, privately negotiated transactions, or otherwise in accordance with applicable securities laws. The timing, price, and amount of repurchases (if any) will be made at the discretion of management of our general partner and are subject to market conditions, as well as corporate, regulatory, and other considerations. This Unit Repurchase Program does not obligate the Partnership to acquire any common units and may be cancelled or terminated by our general partner’s board of directors at any time.

Management and Operations

The Partnership, including CVR GP, is party to a number of agreements with CVR Energy and its subsidiaries to manage certain business relationships between the Partnership and the other parties thereto. The various rights and responsibilities of the Partnership, and its partners, are set forth in the Partnership’s limited partnership agreement and, as applicable, those agreements with CVR Energy. CVR GP manages and operates the Partnership via a combination of the general partner’s senior management team and CVR Energy’s senior management team pursuant to a services agreement among CVR Energy, CVR GP, and the Partnership. See ~~Note 13 (“Related Party Transactions”~~Part II, Item 8 of CVR Partners’ Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) 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 on an annual or continuing basis.

(2) Basis of Presentation

The accompanying condensed consolidated financial statements have been 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 (the “SEC”). These condensed consolidated financial statements should be read in conjunction with the December 31, ~~2018~~2019 audited consolidated financial statements and notes thereto included in ~~CVR Partners’ Annual Report on~~the 2019 Form ~~10-K for the year ended December~~10-K.

March 31, ~~2018 (the “2018 Form 10-K”).~~2020 | 9

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In the opinion of the Partnership’s management, the accompanying condensed consolidated financial statements reflect all adjustments that are necessary for fair presentation of the financial position and results of operations of the Partnership for the periods presented. Such adjustments are of a normal recurring nature, unless otherwise disclosed.

Certain reclassifications have been made within the condensed consolidated balance sheets as of December 31, 2019 and the condensed consolidated statements of operations for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019. As of December 31, 2019, catalyst inventory of $5.6 million has been reclassified to Other long-term assets to conform ~~with~~to current presentation.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. Results of operations and cash flows for the interim periods presented are not necessarily indicative of the results that will be realized for the year ending December 31, ~~2019~~2020 or any other interim or annual period.

(3) Recent Accounting Pronouncements

Recent Accounting ~~Pronouncement~~Pronouncements - Adoption of ~~New Lease~~Credit Losses Standard

In ~~February~~June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) ~~No. 2016-02, “Leases” (“~~2016-13, Financial Instruments - Credit Losses (Topic 326). The ASU ~~2016-02”), creating~~replaces the incurred loss model with a ~~new topic, FASB ASC Topic 842,~~ ~~“Leases”~~ ~~(“Topic 842”), which supersedes lease requirements in FASB ASC Topic 840,~~ ~~“Leases.”~~ ~~The new standard revises accounting~~current expected credit loss model for ~~operating leases by a lessee,~~

~~September 30, 2019 |~~ 8

~~Table~~more timely recognition of ~~Contents~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~among~~expected impairment losses for most financial assets and certain other ~~changes, and requires a lessee to recognize a liability related to future lease payments and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term~~instruments that are not measured at fair value through net income. Effective January 1, 2020, we adopted this ASU with no material impact on the ~~balance sheet. The ROU asset is classified as Other long-term assets on the condensed~~Partnership’s consolidated ~~balance sheet. The current and long-term lease liabilities are classified as Other current liabilities and Other long-term liabilities, respectively, on the condensed consolidated balance sheet.~~financial position or results of operations.

~~We adopted Topic 842 as~~Recent Accounting Pronouncements - Adoption of January 1, 2019, electing the option to apply the transition provisions at the adoption date instead of the earliest comparative period presented in the financial statements. In connection with the adoption of Topic 842, we made the following elections:Fair Value Measurement Standard

~~Under the short-term lease exception provided for in Topic 842, only ROU assets and the related lease liabilities for leases with an initial term greater than one year were recognized;~~

~~The accounting treatment for existing land easements was carried forward;~~

~~Lease and non-lease components were not, and will not, be bifurcated for all of the Partnership’s asset groups; and~~

The portfolio approach was, and will continue to be, used in the selection of the discount rate used to calculate minimum lease payments and the related ROU asset and operating lease liability amounts.

The adoption of Topic 842 on January 1, 2019 incrementally impacted the Partnership’s condensed consolidated balance sheet as of that date. The following presents the financial statement line items impacted by the Partnership’s Topic 842 adoption.

~~Effect of Topic 842 Adoption on the Condensed Consolidated Balance Sheet as of January 1, 2019~~

(in thousands)
December 31, 2018
As Stated

Effect of Adoption of
Topic 842 - Leases (Unaudited)

January 1, 2019
As Adjusted
Current assets:
Prepaid expenses and other current assets $ 6,989
$ (2,650 ) (1) $ 4,339
Total currents assets 193,981
(2,650 ) 191,331
Other long-term assets 4,198
16,923
(2) 21,121
Total assets $ 1,254,388
$ 14,273
$ 1,268,661
Current liabilities:
Other current liabilities $ 24,066
$ 3,462
(3) $ 27,528
Total current liabilities 122,635
3,462
126,097
Long-term liabilities:
Other long-term liabilities 2,938
10,811
(3) 13,749
Total long-term liabilities 631,927
10,811
642,738
Equity:
Total liabilities and partners’ capital $ 1,254,388
$ 14,273
$ 1,268,661


~~(1)~~	~~Represents lease prepayments reclassified to ROU assets.~~


~~(2)~~	~~Represents recognition of initial ROU assets for operating leases, including the reclassification of certain lease prepayments.~~


~~(3)~~	~~Represents the initial recognition of lease liabilities.~~

~~New Accounting Standards Issued But Not Yet Implemented~~

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The ASU eliminates such disclosures as the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy. Certain disclosures are required to be applied on a retrospective basis and others on a prospective basis. ~~This ASU is effective for the Partnership beginning~~Effective January 1, 2020, ~~with early adoption permitted. The Partnership is evaluating the effect of adopting~~we adopted this ASU ~~but does not currently expect adoption will have a~~with no material impact on the Partnership’s disclosures.

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

In ~~August 2018,~~March 2020, the FASB issued ASU ~~2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)~~2020-04, Reference Rate Reform (Topic 848). This ASU ~~addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement~~was issued because, by the end of 2021, banks will no longer be required to report information that is used to determine London Interbank Offered Rate (“LIBOR”), which is used globally by all types of entities. As a ~~service~~result, LIBOR could be discontinued, as well as other interest rates used globally. ASU 2020-04 provides companies with optional expedients for contract modifications under Topics 310, 470, 842, and 815-15, excluded components of certain hedging relationships, fair value hedges, and cash flow hedges, as well as certain exceptions, which are intended to help ease the potential accounting burden associated with transitioning away from these reference rates. Companies can apply the ASU immediately. However, the guidance will only be available for a limited time (generally through December 31, 2022). The Partnership is currently evaluating the impact that adopting this new accounting standard will have on its consolidated financial statements and related disclosures.

(4) Inventories

Inventories consisted of the following:


(in thousands)	March 31, 2020		December 31, 2019
Finished goods	$	26,583	$	17,612
Raw materials	124		243
Parts, supplies and other	28,385		30,441
Total inventories	$	55,092	$	48,296

~~September 30, 2019~~March 31, 2020 | 910

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This standard is effective for the Partnership beginning January 1, 2020 with early adoption permitted. The amendments in this standard can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Partnership is evaluating the effect of adopting this new accounting guidance on its consolidated financial statements, but does not currently expect adoption will have a material impact on the Partnership’s consolidated financial position or results of operations.

~~Inventories consisted of the following:~~

(in thousands) September 30, 2019 December 31, 2018
Finished goods $ 19,919
$ 25,136
Raw materials 362
439
Parts, supplies and other 36,583
37,979
Total inventories $ 56,864
$ 63,554

(5) Property, Plant and Equipment

Property, plant and equipment consisted of the following:


(in thousands)	March 31, 2020		December 31, 2019
Machinery and equipment	$	1,384,588	$	1,378,651
Buildings and improvements	17,399		17,221
Automotive equipment	16,637		16,691
Land and improvements	14,040		14,075


Construction in progress	6,121		5,198
Other	1,752		1,752
	1,440,537		1,433,588
Less: Accumulated depreciation	500,209		481,629
Total property, plant and equipment, net	$	940,328	$	951,959

(in thousands) September 30, 2019 December 31, 2018
Machinery and equipment $ 1,360,019
$ 1,362,965
Buildings and improvements 17,116
17,116
Automotive equipment 16,719
16,773
Land and improvements 13,751
13,250
Construction in progress 17,299
15,126
Other 1,654
2,753
1,426,558
1,427,983
Less: Accumulated depreciation 462,056
412,743
Total property, plant and equipment, net $ 964,502
$ 1,015,240

On October 22, 2019, the Audit Committee of CVR Energy and the Conflicts Committee of the Board of Directors of the general partner of CVR Partners each agreed to authorize the exchange of certain parcels of property owned by subsidiaries of CVR Energy with an equal number of parcels owned by subsidiaries of CVR Partners, all located in Coffeyville, Kansas (the “Property Swap”). This Property Swap will enable each such subsidiary to create a more usable contiguous parcel of land near its own operating footprint. The Partnership will account for this transaction in accordance with the ASC 805-50 guidance on transferring assets between entities under common control.

We lease railcars and certain facilities to support the Partnership’s operations. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements.

~~September 30, 2019 |~~ 10

~~Table of Contents~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

~~Effect of Initial Adoption of New Lease Standard - January 1, 2019~~

~~ROU Assets. Upon initial recognition, our ROU assets for operating and finance leases were comprised of the following:~~

(in thousands)
January 1, 2019
(initial recognition)
Railcar leases $ 14,255
Real Estate and other leases 18
Total ROU assets $ 14,273

~~Lease Liabilities. Upon initial recognition, our lease liabilities for operating and finance leases were comprised of the following:~~

(in thousands)
January 1, 2019
(initial recognition)
Current liabilities:
Operating leases $ 3,462
Long-term liabilities:
Operating leases 10,811
Total lease liabilities $ 14,273

Balance Sheet Summary ~~for the Period Ended September 30,~~as of March 31, 2020 and December 31, 2019

The following tables summarize the ROU asset and lease liability balances for the Partnership’s operating and finance leases at ~~September 30, 2019:~~March 31, 2020 and December 31, 2019:


(in thousands)	March 31, 2020		December 31, 2019
Operating Leases:
ROU asset, net

Railcars	$	9,835	$	10,826
Real estate and other	2,492		2,581
Lease liability

Railcars	$	10,137	$	11,088
Real estate and other	183		288

Finance Leases:
ROU asset, net
Real estate and other	$	176	$	201
Lease liability
Real estate and other	$	180	$	205

(in thousands) September 30, 2019
Operating Leases:
ROU asset, net
Railcars $ 11,454
Real estate and other 2,396
Lease liability
Railcars $ 11,666

Financing Leases:
ROU asset, net
Real estate and other $ 226
Lease liability
Real estate and other $ 229

~~September 30, 2019~~March 31, 2020 | 11

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Lease Expense Summary for the Three Months Ended March 31, 2020 and ~~Nine months ended September 30,~~ 2019

We recognize lease expense on a straight-line basis over the lease term. For the three ~~and nine~~ months ended ~~September 30,~~ March 31, 2020 and 2019, we recognized lease expense comprised of the following components:


	Three Months Ended March 31,
(in thousands)	2020		2019
Operating lease expense	$	1,111	$	1,023

Finance lease expense:
Amortization of ROU asset	$	27	$	105
Interest expense on lease liability	2		6

(in thousands) Three Months Ended
September 30, 2019 Nine Months Ended
September 30, 2019
Operating lease expense $ 1,023
$ 3,069
Financing lease expense:
Amortization of ROU asset $ 25
$ 297
Interest expense on lease liability 2
17

Short-term lease expense, recognized within ~~direct~~Direct operating expenses (exclusive of depreciation and amortization), was ~~$0.2~~$0.1 million and ~~$0.3~~$0.1 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, respectively.

Lease Terms and Discount Rates

The following outlines the remaining lease terms and discount rates used in the measurement of the Partnership’s ROU assets and ~~liabilities:~~liabilities at March 31, 2020 and December 31, 2019:


	March 31, 2020		December 31, 2019
Weighted-average remaining lease term (years)
Operating Leases	3.2		3.4
Finance Leases	2.0		2.3
Weighted-average discount rate
Operating Leases	5.1	%	5.1	%
Finance Leases	4.0	%	3.9	%

September 30, 2019
January 1, 2019
(initial recognition)
Weighted-average remaining lease term (years)
Operating Leases 3.7
4.3
Finance Leases 2.5
0.5
Weighted-average discount rate
Operating Leases 5.1 % 5.1 %
Finance Leases 3.9 % 8.0 %

Maturities of Lease Liabilities

The following summarizes the remaining minimum lease payments through maturity of the Partnership’s ROU assets and liabilities at ~~September 30, 2019:~~March 31, 2020:


(in thousands)	Operating Leases		Financing Leases
Remainder of 2020	$	2,901	$	80
2021	3,459		107
2022	3,020		—
2023	1,163		—
2024	486		—
Thereafter	162		—
Total lease payments	11,191		187
Less: imputed interest	(871)		(7)
Total lease liability	$	10,320	$	180

(in thousands) Operating Leases Financing Leases
Remainder of 2019 $ 1,023
$ 27
2020 3,602
107
2021 3,430
107
2022 2,990
—
2023 1,133
—
Thereafter 648
—
Total lease payments 12,826
241
Less: imputed interest (1,160 ) (12 )
Total lease liability $ 11,666
$ 229

~~September 30, 2019~~March 31, 2020 | 12

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(7) Other Current Liabilities

Other current liabilities consisted of the following:


(in thousands)	March 31, 2020		December 31, 2019
Accrued interest	$	17,469	$	2,518
Personnel accruals	4,246		8,187

Operating lease liabilities	3,318		3,523
Sales incentives	2,611		1,614
Prepaid revenue contracts	309		277
Share-based compensation	358		5,011
Other accrued expenses and liabilities	2,552		2,913
Total other current liabilities	$	30,863	$	24,043

(in thousands) September 30, 2019 December 31, 2018
Accrued interest $ 17,470
$ 2,516
Personnel accruals 7,099
7,993
Share-based compensation 4,959
2,667
Operating lease liabilities 3,220
—
Sales incentives 613
1,727
Prepaid revenue contracts 459
5,863
Other accrued expenses and liabilities 2,867
3,300
Total other current liabilities $ 36,687
$ 24,066

Other current liabilities include amounts accrued by the Partnership and owed to CVR Energy and its affiliates of ~~$4.7 million and $3.5~~$5.5 million at ~~September 30, 2019 and~~ December 31, ~~2018, respectively.~~2019, with 0 such amounts accrued as Other current liabilities at March 31, 2020. See Note 13 (“Related Party Transactions”) for additional discussion.

Long-term debt consists of the following:


(in thousands)	March 31, 2020		December 31, 2019
9.25% Senior Secured Notes, due 2023 (1)	$	645,000	$	645,000
6.50% Notes, due 2021	2,240		2,240

Unamortized discount and debt issuance costs	(13,925)		(14,834)
Total long-term debt	$	633,315	$	632,406

(1)The estimated fair value of long-term debt outstanding was approximately $506.3 million and $673.8 million as of March 31, 2020 and December 31, 2019, respectively.

Credit Facility



(in thousands)	Total Capacity		Amount Borrowed as of March 31, 2020		Outstanding Letters of Credit		Available Capacity as of March 31, 2020		Maturity Date
Asset Based (AB) Credit Facility (2)	$	49,607	$	—	$	—	$	49,607	September 30, 2021


~~(1)~~			~~The estimated fair value of long-term debt outstanding was approximately $672.4 million and $670.8 million as of September 30, 2019 and December 31, 2018, respectively.~~

~~Credit Facility~~

(in thousands) Total Capacity Amount Borrowed as of September 30, 2019 Outstanding Letters of Credit Available Capacity as of September 30, 2019 Maturity Date
Asset Based (“AB”) Credit Facility (2) $ 47,517
$ —
$ —
$ 47,517
September 30, 2021


~~(2)~~	At the option of the borrowers, loans under the AB Credit Facility initially bear interest at an annual rate equal to (i) 2.00% plus LIBOR or (ii) 1.00% plus a base rate, subject to a 0.50% step-down based on the previous quarter’s excess availability.

(2)At the option of the borrowers, loans under the AB Credit Facility initially bear interest at an annual rate equal to (i) 2.00% plus LIBOR or (ii) 1.00% plus a base rate, subject to a 0.50% step-down based on the previous quarter’s excess availability.

Covenant Compliance

The Partnership, isand its subsidiaries, were in compliance with all covenants ~~of the AB Credit Facility, the 9.25% Senior Secured Notes, and the 6.50% Notes~~under their respective debt instruments as of ~~September 30, 2019.~~March 31, 2020.

~~September 30, 2019~~March 31, 2020 | 13

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(9) Revenue

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


	Three Months Ended March 31,
(in thousands)	2020		2019
Ammonia	$	14,147	$	13,352
UAN	47,014		64,064
Urea products	3,533		4,671
Net sales, exclusive of freight and other	64,694		82,087
Freight revenue	7,722		8,018
Other revenue	2,664		1,768
Net sales	$	75,080	$	91,873

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2019 2018 2019 2018
Ammonia $ 11,110
$ 11,391
$ 74,416
$ 51,361
UAN 61,970
52,681
199,576
156,838
Urea products 4,575
4,987
14,251
14,834
Net sales, exclusive of freight and other 77,655
69,059
288,243
223,033
Freight revenue 8,752
8,805
23,909
23,908
Other revenue 2,175
2,045
5,963
6,024
Net sales $ 88,582
$ 79,909
$ 318,115
$ 252,965

The Partnership sells its products, on a wholesale basis, under a contract or by purchase order. The Partnership’s contracts with customers generally contain fixed pricing and most have terms of less than one year. The Partnership recognizes revenue at the point in time at which the customer obtains control of the product, which is generally upon delivery and acceptance by the customer. The customer acceptance point is stated in the contract and may be at one of the Partnership’s manufacturing facilities, at one of the Partnership’s off-site loading facilities or at the customer’s designated facility. Freight revenue recognized by the Partnership represents the pass-through finished goods delivery costs incurred prior to customer acceptance and is reimbursed by customers. An offsetting expense for freight is included in Cost of materials and other. Qualifying taxes collected from customers and remitted to governmental authorities are not included in reported revenues.

Depending on the product sold and the type of contract, payments from customers are generally either due prior to delivery or within 15 to 30 days of product delivery.

The Partnership generally provides no warranty other than the implicit promise that goods delivered are free of liens and encumbrances and meet the agreed upon specifications. Product returns are rare, and as such, the Partnership does not record a specific warranty reserve or consider activities related to such warranty, if any, to be a separate performance obligation.

The Partnership has an immaterial amount of variable consideration for contracts with an original duration of less than a year. A small portion of the Partnership’s revenue includes contracts extending beyond one year, some of which contain variable pricing in which the majority of the variability is attributed to the market-based pricing. The Partnership’s contracts do not contain a significant financing component.

The Partnership has an immaterial amount of fee-based revenue, included in other revenue in the table above, that is recognized based on the net amount of the proceeds received.

Transaction ~~price allocated~~Price Allocated to ~~remaining performance obligations~~Remaining Performance Obligations

As of ~~September 30, 2019,~~March 31, 2020, the Partnership had approximately ~~$7.3~~$9.5 million of remaining performance obligations for contracts with an original expected duration of more than one year. The Partnership expects to recognize approximately ~~20%~~$3.0 million of these performance obligations as revenue by the end of ~~2019,~~2020, an additional ~~40%~~$3.7 million in ~~2020,~~2021, and the remaining balance thereafter. The Partnership has elected to not disclose the amount of transaction price allocated to remaining performance obligations for contracts with an original expected duration of less than one year. The Partnership has elected to not disclose variable consideration allocated to wholly unsatisfied performance obligations that are based on market prices that have not yet been determined.

Contract ~~balances~~Balances

The Partnership’s deferred revenue is a contract liability that primarily relates to fertilizer sales contracts requiring 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. Contracts~~

~~September 30, 2019~~March 31, 2020 | 14

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

contract amounts. Contracts requiring prepayment are generally short-term in nature and, as discussed above, revenue is recognized at the point in time in which the customer obtains control of the product. ~~At September 30, 2019, $0.4 million of the deferred revenue balance pertained to prepaid contracts where the associated receivable was recognized as it had not yet been collected by the Partnership.~~

A summary of the deferred revenue activity for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 is presented below:


(in thousands)
Balance at December 31, 2019	$	27,841
Add:
New prepay contracts entered into during the period (1)	16,725
Less:
Revenue recognized that was included in the contract liability balance at the beginning of the period	5,581
Revenue recognized related to contracts entered into during the period	1,185
Other changes	166
Balance at March 31, 2020	$	37,634

(in thousands)
Balance at December 31, 2018 $ 68,804
Add:
New prepay contracts entered into during the period (1) 24,121
Less:
Revenue recognized that was included in the contract liability balance at the beginning of the period 67,823
Revenue recognized related to contracts entered into during the period 8,174
Other changes 480
Balance at September 30, 2019 $ 16,448

(1) Includes ~~$23.7~~$15.6 million where payment associated with prepaid contracts was ~~collected.~~collected as of March 31, 2020.

A summary of compensation expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ is presented below:


	Three Months Ended March 31,
(in thousands)	2020		2019
Phantom Units	$	(259)	$	790
Other Awards (1)	(218)		318
Total share-based compensation expense	$	(477)	$	1,108

(1)Other awards include the allocation of compensation expense for certain employees of CVR Energy and certain of its subsidiaries who perform services for the Partnership under the services agreement with CVR Energy and the Limited Partnership Agreement, respectively, and participate in equity compensation plans of CVR Partners’ affiliates.


~~(1)~~	Other awards include the allocation of compensation expense for certain employees of CVR Energy and certain of its subsidiaries who perform services for the Partnership under the services agreement with CVR Energy and the Limited Partnership Agreement, respectively, and participate in equity compensation plans of CVR Partners’ affiliates.

(11) Commitments and Contingencies

~~Except as noted below, there~~There have been no material changes in the Partnership’s commitments and contingencies disclosed in the ~~2018~~2019 Form 10-K. In the ordinary course of business, the Partnership 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 has been incurred and the loss can be reasonably estimated. While it is not possible to predict the outcome of such proceedings, if one or more of them were decided against us, the Partnership believes there would be no material impact on its consolidated financial statements.

~~Litigation~~

In 2008, Coffeyville Resources Nitrogen Fertilizer LLC (“CRNF”), a subsidiary of CVR Partners LP, protested the reclassification and reassessment by Montgomery County, Kansas (the “County”) of CRNF’s nitrogen fertilizer plant following expiration of its ten year property tax abatement that expired on December 31, 2007, which reclassification and reassessment resulted in an increase in CRNF’s annual property tax expense in excess of $10 million per year for the 2008 through 2012 tax years. Despite its protest, CRNF fully accrued and paid these property taxes. In February 2013, the County and CRNF agreed to a settlement for tax years 2009 through 2012 which resulted in decreased property taxes through 2017, leaving 2008 in dispute. In 2013, the Kansas Court of Appeals overturned an adverse ruling of the Kansas Board of Tax Appeals (“BOTA”) and instructed BOTA to classify each CRNF asset on an asset-by-asset basis. In March 2015, BOTA concluded its classification and determined a substantial majority of CRNF’s assets in dispute were personal property for the 2008 tax year. In September 2018, the Kansas

~~September 30, 2019~~March 31, 2020 | 15

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Court of Appeals upheld BOTA’s property tax determinations in CRNF’s favor. In October 2018, the County petitioned the Kansas Supreme Court to review the Court of Appeals determination. Subsequent briefs were filed by CRNF and the County. In April 2019, CRNF and the County executed an agreement under which the County agreed to withdraw its petition to the Kansas Supreme Court and CRNF is expected to recover $7.9 million through favorable property tax assessments from 2019 through 2028, subject to the terms of the settlement agreement.

(12) Supplemental Cash Flow Information

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


	Three Months Ended March 31,
(in thousands)	2020		2019
Supplemental disclosures:
Cash received for income taxes, net of payments	$	(1)	$	—
Cash paid for interest	49		53
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	1,118		966
Operating cash flows from finance leases	2		9
Financing cash flows from finance leases	25		135

Non-cash investing activities:

Change in capital expenditures included in accounts payable	(1,117)		(668)

Effective January 1, 2020, the Partnership entered into a new Coffeyville Master Service Agreement (the “Coffeyville MSA”) between Coffeyville Resources Nitrogen Fertilizer LLC (“CRNF”) and Coffeyville Resources Refining & Marketing, LLC, an indirect, wholly-owned subsidiary of CVR Energy (“CRRM”) and a new Corporate Master Service Agreement (the “Corporate MSA”) between CRLLC and certain of its affiliates, including CVR GP and the Partnership and its subsidiaries. For a description of these agreements, see Note 9 (“Related Party Transactions”) in Part II, Item 8 of the 2019 Form 10-K.

Activity associated with the Partnership’s related party arrangements for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ is summarized below.

Related Party Activity

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

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

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) Related Party 2019 2018 2019 2018
Net Sales
Feedstock and Shared Services Agreement CRRM (1) $ 113
$ —
$ 115
$ 292
(3)Prepaid expenses, included in Prepaid expenses and other current assets, are amounts paid for feedstocks and services provided by CRRM under the Coffeyville MSA.

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

On October 22, 2019, the audit committee of CVR Energy and the Conflicts Committee of the board of directors of CVR GP each agreed to authorize the exchange of certain parcels of property owned by subsidiaries of CVR Energy with an equal number of parcels owned by subsidiaries of CVR Partners, all located in Coffeyville, Kansas (the “Property Exchange”). On

~~September 30, 2019~~March 31, 2020 | 16

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

February 19, 2020, a subsidiary of CVR Energy and a subsidiary of CVR Partners executed the Property Exchange agreement. This Property Exchange will enable each such subsidiary to create a more usable, contiguous parcel of land near its own operating footprint. CVR Energy and the Partnership accounted for this transaction in accordance with the ASC 805-50 guidance on transferring assets between entities under common control. This transaction resulted in a net reduction to the Partnership’s partners’ capital of approximately $0.1 million.

~~Expenses from related parties~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) Related Party 2019 2018 2019 2018
Cost of materials and other
Coke Supply Agreement CRRM (1) $ 705
$ 1,057
$ 3,255
$ 2,133
Hydrogen Purchase and Sale Agreement CRRM (1) 984
1,072
3,719
3,157

Direct operating expenses (exclusive of depreciation and amortization)
Services Agreement CVR Energy $ 797
$ 761
$ 2,586
$ 2,145
Limited Partnership Agreement CVR GP 219
242
595
572

Selling, general and administrative expenses
Services Agreement CVR Energy $ 3,915
$ 3,595
$ 11,724
$ 10,353
Limited Partnership Agreement CVR GP 651
626
2,191
1,920

~~Amounts due to related parties~~

(in thousands) Related Party September 30, 2019 December 31, 2018
Prepaid expenses and other current assets
Feedstock and Shared Services Agreement CRRM (1) $ 128
$ —

Accounts payable to affiliates
Feedstock and Shared Services Agreement CRRM (1) $ 681
$ 1,106
Hydrogen Purchase and Sale Agreement and other CRRM (1) 348
324
Coke Supply Agreement CRRM (1) 132
138
Services Agreement CVR GP 970
1,372

Other current liabilities
Limited Partnership Agreement CVR GP $ 1,697
$ 1,179
Services Agreement CVR Energy 3,009
2,352

Other long-term liabilities
Limited Partnership Agreement CVR Energy $ 530
$ 503

~~September 30, 2019 |~~ 17

~~Table of Contents~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(unaudited)~~

Distributions to CVR Partners’ Unitholders

~~The following table presents distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, as of September 30, 2019.~~

Dividends Paid (in thousands)
Related Period Date Paid Dividend Per Common Unit Unitholders CVR Energy Total
2018 - 4th Quarter March 11, 2019 $ 0.12
$ 8,924
$ 4,670
$ 13,594
2019 - 1st Quarter May 13, 2019 0.07
5,205
2,724
7,929
2019 - 2nd Quarter August 12, 2019 0.14
10,411
5,449
15,860
Total $ 0.33
$ 24,540
$ 12,843
$ 37,383

For the third quarter of 2019, the Partnership, upon approval by the Board of Directors of CVR Partners’ general partner on October 22, 2019, declared a distribution of $0.07 per common unit, or $7.9 million, which is payable November 12, 2019 to unitholders of record as of November 4, 2019. Of this amount, CVR Energy will receive approximately $2.7 million, with the remaining amount payable to public unitholders.

Distributions, if any, including the payment, amount, and timing thereof, are subject to change at the discretion of the Board of Directors of CVR Partners’ general partner. There were 0 distributions paid by the Partnership during the three months ended March 31, 2020 related to the fourth quarter of 2019, and 0 distributions were declared for the first quarter of 2020.

The following table presents distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, during 2019.


				Distributions Paid (in thousands)
Related Period	Date Paid	Distribution Per Common Unit		Public Unitholders		CVR Energy		Total
2018 - 4th Quarter	March 11, 2019	$	0.12	$	8,924	$	4,670	$	13,594
2019 - 1st Quarter	May 13, 2019	0.07		5,205		2,724		7,929
2019 - 2nd Quarter	August 12, 2019	0.14		10,411		5,449		15,860
2019 - 3rd Quarter	November 11, 2019	0.07		5,205		2,724		7,930
Total distributions		$	0.40	$	29,745	$	15,567	$	45,313

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition, results of operations, and cash flows should be read in conjunction with the unaudited condensed consolidated financial statements and related notes and with the statistical information and financial data appearing in this Report, as well as our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the Securities and Exchange Commission (“SEC”) on February ~~21, 2019~~20, 2020 (the ~~“2018~~“2019 Form 10-K”). Results of operations for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and cash flows for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 are not necessarily indicative of results to be attained for any other period. See “Important Information Regarding ~~Forward Looking~~Forward-Looking Statements”.

Partnership Overview

CVR Partners, LP (“CVR Partners” or the “Partnership”) is a Delaware limited partnership formed in 2011 by CVR Energy, Inc. (“CVR Energy”) to own, operate, and grow our nitrogen fertilizer business. We produce and distribute 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, which are located in Coffeyville, Kansas and East Dubuque, Illinois. 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 refining, marketing, and logistics operations.

Strategy and Goals

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:~~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.

•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 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.

- 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.


•	~~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 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~~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.

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Strategic Objectives

We have outlined the following strategic objectives to drive the accomplishment of our mission:

Safety - We aim to achieve continuous improvement in all environmental, health and safety 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.

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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 efficient as possible by maintaining low operating costs and disciplined deployment of capital.

Achievements

During ~~2019,~~the first quarter of 2020, we successfully executed a number of achievements in support of our strategic objectives shown below through the date of this filing:

Safety

Reliability

Market Capture

Financial Discipline

~~Safely completed the East Dubuque turnaround~~Operated all facilities and corporate offices safely and reliably and maintained financial discipline amid COVID-19 pandemic.

Maintained high asset reliability and utilization at both facilities ~~through~~during the ~~third~~first quarter of ~~2019~~2020.

Achieved ~~monthly record ammonia volumes at~~8% improvement in total recordable incident rate for the ~~East Dubuque nitrogen fertilizer facility for April 2019~~first quarter 2020 compared to the first quarter 2019.

~~Generated positive cash available for distribution for three consecutive quarters in 2019~~

~~Declared cash distributions of 40 cents per unit in 2019~~

Industry Factors and Market Conditions

Within the nitrogen fertilizer business, earnings and cash flows from operations are primarily affected by the relationship between nitrogen fertilizer product prices, utilization, and operating costs and expenses, including petroleum 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, among other factors, world grain demand and production levels, changes in world population, the cost and availability of fertilizer transportation infrastructure, weather conditions, the availability of imports, and the extent of government intervention in agriculture markets.

Nitrogen fertilizer prices are also affected by local factors, including local market conditions ~~weather patterns,~~ 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 market, resulting in price volatility and a reduction in product margins. Moreover, the industry typically experiences seasonal fluctuations in demand for nitrogen fertilizer products.

General Business Environment

In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The COVID-19 pandemic and actions taken by governments and others in response thereto is negatively impacting the worldwide economy, financial markets, and the agricultural industry. The COVID-19 pandemic has resulted in significant business and operational disruptions, including business closures in the

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restaurant and food supply industries, amongst others, liquidity strains, destruction of non-essential demand, as well as supply chain challenges, travel restrictions, stay-at-home orders, and limitations on the availability of the workforce, including farmers in the agricultural industry. As a result, the global demand for liquid transportation fuels, including ethanol (the production of which is a significant driver of demand for fertilizer), has declined, causing many refineries and plants to reduce production or idle, evidenced by a decline in average ethanol production per day of 45% from 2019. The potential for a decline in production at refineries, including from Coffeyville Resources Refining & Marketing, LLC, an indirect, wholly-owned subsidiary of CVR Energy (“CRRM”), could result in increased costs incurred by the Partnership in future periods to source feedstocks, such as pet coke and natural gas, at spot prices. Concerns over the negative effects of the COVID-19 pandemic on economic and business prospects across the world have contributed to increased market and grain price volatility, uncertainty in food supply demands, and have diminished expectations for the global economy and may precipitate a prolonged economic slowdown and recession. As a result, the Partnership may witness some decline in demand for its products in 2020.

The Partnership believes the general business environment in which it operates will continue to remain volatile through at least the first half of 2020, and likely through the remainder of the year, driven by uncertainty around the availability and prices of its feedstocks and the demand for its products. As a result, the Partnership anticipates its future operating results and current and long-term financial condition may be negatively impacted. Due to the rapidly evolving situation, the uncertainty of its duration, and the timing of recovery, the Partnership is not able at this time to predict the extent to which these events may have a material, or any, effect on its financial or operational results, including any potential impairment of goodwill associated with our Coffeyville reporting unit.

With the adverse economic impacts discussed above and the uncertainty surrounding the COVID-19 pandemic, there is a heightened risk that amounts recognized, including goodwill, may not be recoverable. We have $41.0 million in goodwill at March 31, 2020 associated with our Coffeyville reporting unit for which the estimated fair value has been in excess of carrying value based on our 2018 and 2019 assessments. While our assessment in 2020 has not identified the existence of an impairment indicator, we continue to monitor the current environment, including the duration and breadth of the impacts that the pandemic will have on demand for our fertilizer products, to assess whether qualitative factors indicate a quantitative assessment is required. If a quantitative assessment is performed, the extent to which the recoverability of our goodwill could be impaired is unknown. Such impairment could have a significant adverse impact on our results of operations; however, an impairment would have no impact on our financial condition or liquidity.

2020 Market Conditions

While there is risk of shorter-term volatility given the inherent nature of the commodity cycle and the impacts of the global COVID-19 pandemic, the Partnership believes the ~~longer-term~~long-term fundamentals for the U.S. nitrogen fertilizer industry remain intact. The Partnership views the anticipated combination of (i) increasing global population, (ii) decreasing arable land per capita, (iii) continued evolution to more protein-based diets in developing countries, (iv) sustained use of corn as feedstock for the domestic production of ethanol, and (v) positioning at the lower end of the global cost curve should continue to provide a solid foundation for nitrogen fertilizer producers in the U.S. over the longer term.

Weather significantly impacted the demand for ammonia and UAN in 2019 due to a lack of extended dry conditions required for ammonia application and excessive moisture in the fall season. As a result, there was limited ability to apply ammonia after the fall harvest season and before the winter freeze. The decreased application resulted in a shift of deliveries from the fourth quarter of 2019 to the beginning of the second quarter in 2020. This has created a surplus of inventory in the market that was further exacerbated by continued imports of foreign UAN tons into the U.S. market. As a result of these factors, the Partnership has seen a softening of prices related to these products. This softening is not expected to be sustained.

Corn and soybean are two major crops planted by farmers in North America. Corn crops result in the depletion of the amount of nitrogen and ammonia within the soil in which it is grown, which in turn, results in the need for these nutrients to be replenished after each growing cycle. Unlike corn, soybean is able to obtain its own nitrogen through a process known as “N fixation”. As such, upon the harvesting of soybean, the soil retains a certain amount of nitrogen which results in lower demand for nitrogen for the following corn planting cycle. Due to these factors, nitrogen fertilizer consumers generally operate a balanced corn-soybean rotational planting cycle as, evident through the chart presented below for 2020 and 2019.

The relationship between the total acres planted for both corn and soybean has a direct impact on the overall demand for nitrogen products. As the number of corn acres increases, the market and demand for nitrogen also increases. Correspondingly, as the number of soybean acres increases, the market and demand for nitrogen decreases.

~~September 30, 2019~~March 31, 2020 | 20

~~During 2019, weather impacted the business by causing delays~~There has been a decline in the ethanol market due to decreased demand for transportation fuels as a result of the COVID-19 pandemic. Ethanol is blended with gasoline to meet renewable fuel standard requirements and for its octane value. Ethanol production has historically consumed approximately 35% of the U.S. corn crop, so demand for corn generally rises and falls with ethanol demand. While there is uncertainty surrounding when gasoline demand will return to normal levels, the drop in ethanol demand has not yet significantly impacted spring planting ~~conditions. Increased amounts~~decisions, as evidenced through the chart below.

The preliminary 2020 United States Department of ~~rain led~~Agriculture (“USDA”) U.S. farmer planting intentions report indicated farmers’ intentions to ~~ineffective planting~~plant 97.0 million acres of corn, ~~and soybean crops, resulting~~representing an increase of 8.1% in ~~an anticipated lower yield per~~corn acres planted ~~acre~~as compared to 89.7 million corn acres in 2019. ~~Furthermore, the severe flooding~~Planted soybean acres are estimated to be 83.5 million acres, representing a 9.7% increase in ~~Kansas and Oklahoma curtailed UAN rail shipments~~soybean acres planted as compared to 76.1 million soybean acres in ~~the second quarter.~~2019. Despite these ~~conditions,~~anticipated increases in corn acres planted in 2020, if the current gasoline demand and ethanol blending continues to be weak, there ~~was still strong~~is an expectation that corn planted acres could be lower than estimated while remaining above 2019 levels and corn inventories could be elevated after the harvest in fall 2020 leading to lower planted corn acres in future years. Despite the above potential risks for 2021 or later, the Partnership and industry expect solid demand for ~~nitrogen due to~~crop inputs for the ~~catchup from~~2020 spring season.

Although the ~~poor fall application and late start to spring. The late~~spring planting season ~~extended well into July~~ and ~~fertilizer consumption brought customer inventories~~current shipments have continued as expected, we will continue to ~~very low levels by~~monitor the ~~end of~~COVID-19 pandemic and business environment and its potential impacts on the ~~season, creating strong demand for fertilizer in the third quarter.~~Partnership.

The ~~table~~tables below ~~shows~~show relevant market indicators by month through ~~September 30, 2019:~~March 31, 2020:

(1)Information used within this chart was obtained from the USDA, National Agricultural Statistics Services. Grown acres for 2020 are preliminary USDA estimated amounts and will be updated for actual amounts during the second quarter.


~~(1)~~	Information used in the charts was obtained from various third-party sources, including Pace Petroleum Coke Quarterly, Green Markets (a Bloomberg Company) and the U.S. Energy Information Administration.

~~Non-GAAP Measures~~

Our management uses certain non-GAAP performance measures, and reconciliations to those measures, to evaluate current and past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. 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 presented for the period ended September 30, 2019:~~

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

~~Adjusted EBITDA~~ - EBITDA adjusted to exclude turnaround expenses and other significant, nonrecurring items which management believes are material to an investor’s understanding of the Partnership’s underlying operating results.

~~Reconciliation of Net Cash Provided By Operating Activities to EBITDA~~ ~~- Net cash provided by operating activities reduced by (i) interest expense, net, (ii) income tax expense (benefit), (iii) change in working capital, and (iv) other non-cash adjustments.~~

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~~Available Cash for Distribution~~(2) - Adjusted EBITDA reduced for cash reserves established by the board of directors of our general partner for (i) debt service, (ii) maintenance capital expenditures, (iii) turnaround expenses and, to the extent applicable, (iv) reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate, if any, 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 of directors of our general partner.

~~Factors Affecting Comparability of Our Financial Results~~

~~Our historical results of operations for the periods presented may not be comparable with prior periods or to our results of operations in the future for the reason discussed below.~~

~~Major Scheduled Turnaround Activities~~

~~On September 14, 2019, the East Dubuque facility began a major scheduled turnaround~~Information used within these charts was obtained from various third-party sources, including Green Markets (a Bloomberg Company), Pace Petroleum Coke Quarterly, and the ammonia and UAN units were down for approximately 17 days during the quarter. This turnaround was completed in October. Overall, quarterly results were negatively impacted due to the lost production during the downtime that resulted in lost sales and certain reduced variable expenses included in Cost of materials and other and Direct operating expenses (exclusive of depreciation and amortization). Exclusive of the impacts due to the lost production during the turnaround downtime, costs of approximately $6.8 million and $7.0 million are included in Direct operating expenses (exclusive of depreciation and amortization) in the Consolidated Statements of Operations for the three and nine months ended September 30, 2019, respectively.U.S. Energy Information Administration (“EIA”), amongst others.

Results of Operations

The following ~~sections~~ should be read in conjunction with the information outlined in the previous sections of this Part I, Item 2, ~~and~~ the financial statements, and related notes thereto in Part I, Item 1 of this Report.

~~Key Operating Data~~

~~Utilization~~ - The ~~following~~ charts presented below summarize our ammonia utilization rates on a consolidated basis and at each of our facilities. Utilization is an important measure used by management to assess operational output at each of the Partnership’s facilities. Utilization is calculated as actual tons produced divided by capacity adjusted for planned maintenance and turnarounds.

~~We present~~The presentation of our utilization is on a two-year rolling average ~~to take~~which takes into account the impact of our planned and unplanned outages on any specific period. We believe the two-year rolling average is a more useful presentation of the long-term utilization performance of our ~~plants.~~facilities.

~~We present utilization~~Utilization is presented solely on ammonia production rather than each nitrogen product as it provides a comparative baseline against industry peers and eliminates the disparity of ~~plant~~facility configurations for upgrade of ammonia into other nitrogen products. With ~~our~~ efforts ~~being~~ primarily focused on ammonia upgrade capabilities, we believe this measure provides a meaningful view of how well we operate.

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~~Consolidated Ammonia Utilization~~ ~~- The~~On a consolidated ~~ammonia~~basis, utilization ~~decreased 2%~~increased 1% to 93% for the two years ended ~~September 30, 2019~~March 31, 2020 compared to the two years ended ~~September 30, 2018. This decrease was primarily a result~~March 31, 2019. The first quarter of 2019 ammonia storage capacity ~~constraints~~was constrained at the East Dubuque ~~facility in the first quarter of 2019 due~~Facility impacting comparability to ~~inclement weather impacting customers’ ability to apply ammonia.~~2020.

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

~~Operating Highlights (three months ended September 30, 2019 versus September 30, 2018)~~

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~~Operating Highlights (nine months ended September 30, 2019 versus September 30, 2018)~~

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Production Volumes - Gross tons produced for ammonia represent the total ammonia produced, including ammonia produced that was upgraded into other fertilizer products. Net tons available for sale represent the ammonia available for sale that was not upgraded into other fertilizer products. The table below presents these metrics for the three months ended March 31, 2020 and 2019:


	Three Months Ended March 31,
(in thousands of tons)	2020	2019
Ammonia (gross produced)	201	179
Ammonia (net available for sale)	78	41
UAN	317	335

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands of tons) 2019 2018 2019 2018
Ammonia (gross produced) 196
212
586
584
Ammonia (net available for sale) 56
63
168
187
UAN 318
338
969
919

Feedstock - Our Coffeyville Facilityutilizes 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 three months ended March 31, 2020 and 2019:


	Three Months Ended March 31,
	2020		2019
Petroleum coke used in production (thousand tons)	125		132
Petroleum coke (dollars per ton)	$	44.68	$	37.70
Natural gas used in production (thousands of MMBtu) (1)	2,141		1,440
Natural gas used in production (dollars per MMBtu) (1)	$	2.42	$	3.83
Natural gas in cost of materials and other (thousands of MMBtu) (1)	1,418		1,008
Natural gas in cost of materials and other (dollars per MMBtu) (1)	$	2.80	$	3.87

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 2019 2018
Petroleum coke used in production (thousand tons) 137
117
404
325
Petroleum coke (dollars per ton) $ 37.75
$ 25.65
$ 36.68
$ 22.89
Natural gas used in production (thousands of MMBtu) (1) 1,700
2,118
5,210
5,933
Natural gas used in production (dollars per MMBtu) (1) $ 2.40
$ 3.03
$ 2.88
$ 3.01
Natural gas in cost of materials and other (thousands of MMBtu) (1) 1,294
1,439
5,487
5,268
Natural gas in cost of materials and other (dollars per MMBtu) (1) $ 2.46
$ 2.98
$ 3.22
$ 3.03

(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 for the Three Months Ended March 31, 2020 and 2019

Overview - For the three months ended March 31, 2020, the Partnership's operating loss and net loss were $5.0 million and $20.7 million, a $14.4 million decrease and $14.6 million decrease, respectively, compared to the three months ended March 31, 2019 driven primarily by decreased ammonia and UAN pricing. Sales pricing has weakened as a result of competitive domestic markets, seasonally high inventories, and increased imports of UAN.


~~(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 expense (exclusive of depreciation and amortization).~~

~~Financial Highlights (three months ended September 30, 2019 versus September 30, 2018)~~

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~~Financial Highlights (nine months ended September 30, 2019 versus September 30, 2018)~~


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

~~Three Months Ended September 30, 2019 Compared to~~(1)See “Non-GAAP Reconciliations” section below for reconciliations of the ~~Three Months Ended September 30, 2018~~non-GAAP measures shown below.

Net Sales. Net sales ~~increased~~decreased by ~~$8.7~~$16.8 million to ~~$88.6~~$75.1 million for the three months ended ~~September 30, 2019~~March 31, 2020 compared to the three months ended ~~September 30, 2018.~~March 31, 2019. This ~~increase~~decrease wasprimarily due to ~~favorable~~unfavorable pricing ~~and volume~~ conditions which contributed ~~$5.5~~$21.6 million ~~and $3.5~~in lower revenues, partially offset by increased sales volumes contributing $5.3 million, ~~respectively, in higher revenues in the current period~~ as compared to ~~2018.~~the three months ended March 31, 2019.

The following table demonstrates the impact of changes in sales volumes and pricing for the primary components of net sales, excluding freight, for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to the three months ended ~~September 30, 2018:~~March 31, 2019:


(in thousands)	Price Variance		Volume Variance
UAN	$	(16,016)	$	(1,030)
Ammonia	$	(5,550)	$	6,344

(in thousands)
Price
Variance

Volume
Variance
UAN $ 4,188
$ 5,100
Ammonia $ 1,321
$ (1,602 )

The ~~increase~~decrease in UAN and ammonia sales pricing for the three months ended ~~September 30, 2019~~March 31, 2020 as compared to the three months ended ~~September 30, 2018~~March 31, 2019 was primarily attributable to ~~inclement weather~~competitive pricing pressures seen throughout the ~~region~~domestic and international markets. For UAN, imported volumes increased as compared to 2019 because of the imposition of duties by the European Union on UAN imports from Russia, Trinidad, and the U.S. For ammonia, customers held a significant amount of inventory due to the delay in application from the fourth quarter 2019 to the beginning of the second quarter 2020. This delay in application was primarily due to excessive moisture in the ~~first quarter~~2019 fall season which delayed normal application from occurring after the fall harvest and before the spring planting season. As ammonia application is slated to be applied prior to the spring planting season, requires extended dry conditions for success, and a majority of ~~2019, delaying~~customers buy on a cyclical basis, there was an increase in the ~~crop cycle and also continuing nitrogen demand~~volumes of ammonia purchased during the three months ended ~~September 30, 2019. As a result of the aforementioned delay in the crop cycle, UAN sales volumes increased for the three months ended September 30, 2019~~March 31, 2020 as compared to the three months

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ended ~~September 30, 2018.~~March 31, 2019. These increases in application and purchases were not seen in the UAN market, as it can be applied more ratably throughout the growing season.

(1)Exclusive of depreciation and amortization expense.

Cost of materials and other. Cost of materials and other for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$21.6~~$24.0 million compared to ~~$19.6~~$23.7 million for the three months ended ~~September 30, 2018. The $2.0 million increase was comprised of a $2.1 million increase in~~March 31, 2019 with increased production costs given higher volumes and higher pet coke costs at our Coffeyville facility, a $0.6 million increase in freight costs representing additional shipments made to our off-premise storage facilities, and a $1.5 million increase due to a draw in inventory resulting from increased demand. These amountspricing that were ~~partially~~ offset by ~~favorable~~lower natural gas ~~pricing~~costs at our East Dubuque ~~facility, contributing $2.3 million for the three months ended September 30, 2019.~~Facility.

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Direct operating expenses (exclusive of depreciation and amortization). Direct operating expenses (exclusive of depreciation and amortization) for the three months ended ~~September 30, 2019~~March 31, 2020 were ~~$47.6~~$35.1 million compared to ~~$35.3~~$34.8 million for the three months ended ~~September 30, 2018.~~March 31, 2019. The increase was primarily due to higher personnel costs.

Depreciation and Amortization Expense - Depreciation and amortization expense decreased $1.0 million for the three months ended March 31, 2020 compared to the three months ended March 31, 2019, as a result of higher depreciation on certain assets in January 2019 through September 2019 that are no longer being utilized following the 2019 turnaround ~~costs~~ at the East Dubuque ~~facility of $6.8 million coupled with an inventory draw contributing $3.8 million due to increased sales in the third quarter of 2019.~~Facility.

~~Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018~~Selling, General, and Administrative Expenses, and Other

~~Net Sales.Net sales increased by $65.2 million to $318.1~~- Selling, general and administrative expenses and other decreased $2.0 million for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the ~~nine~~three months ended ~~September 30, 2018. This increase~~March 31, 2019. The decrease was primarily related to a decrease in share-based compensation and corporate allocated costs.

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Non-GAAP Measures

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

The following are non-GAAP measures that continue to be presented for the period ended March 31, 2020:

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

Reconciliation of Net Cash Provided By Operating Activities to EBITDA~~primarily due~~ - Net cash provided by operating activities reduced by (i) interest expenses, net, (ii) income tax expense (benefit), (iii) change in working capital, and (iv) other non-cash adjustments.

Available Cash for Distribution - EBITDA reduced for cash reserves established by the board of directors of our general partner for (i) debt service, (ii) maintenance capital expenditures, and, to ~~favorable pricing~~the extent applicable, (iii) reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate, if any, in its sole discretion. Available cash for distribution may be increased by the release of previously established cash reserves, if any, and ~~volume conditions which contributed $51.0 million~~other excess cash, at the discretion of the board of directors of our general partner.

We present these measures because we believe they may help investors, analysts, lenders, and ~~$14.7 million, respectively,~~ratings agencies analyze our results of operations and liquidity in ~~higher revenues in the current period~~conjunction with our U.S. GAAP results, including, but not limited to, our operating performance as compared to ~~2018.~~

~~The following table demonstrates~~other publicly traded companies in the ~~impact of changes in sales volumes~~fertilizer industry, without regard to historical cost basis or financing methods, and ~~pricing~~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 ~~the primary components of net sales, excluding freight, for the nine months ended September 30, 2019 as compared~~their most directly comparable U.S. GAAP financial measures. Refer to the ~~nine months ended September 30, 2018:~~

(in thousands)
Price
Variance

Volume
Variance
UAN $ 35,499
$ 7,234
Ammonia $ 15,546
$ 7,509

~~The increase in UAN and ammonia sales pricing~~“Non-GAAP Reconciliations” included herein for ~~the nine months ended September 30, 2019 as compared~~reconciliation of these amounts. Due to ~~the nine months ended September 30, 2018 was primarily attributable~~rounding, numbers presented within this section may not add or equal to a shift in the timing of demand from the fourth quarter of 2018 to the second quarter of 2019, as customers delayed receipt of nitrogen products due to continued inclement weather. As a result, customer demand for ammonia increased in the second quarter of 2019 as customers attempted to make up for the missed application. In addition, the aforementioned ammonia application coupled with freezing temperatures and flooding throughout the Midwest and Southern Plains in the current period shifted the demand for ammonia, resulting in increased sales volumes for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

numbers or totals presented elsewhere within this document.

~~Cost of materials and other.~~ Cost of materials and other for the nine months ended September 30, 2019 was $71.3 million, compared to $61.2 million for the nine months ended September 30, 2018. The $10.1 million increase was comprised primarily of a $6.3 million increase in pet coke costs at our Coffeyville facility, coupled with a draw in ammonia inventories as a result of increased sales contributing $4.5 million.

~~Direct Operating Expenses (exclusive of depreciation and amortization).Direct operating expenses (exclusive of depreciation and amortization) for the nine months ended September 30, 2019~~were $128.0 million as compared to $121.5 million for the nine months ended September 30, 2018. The $6.5 million increase was primarily due to spare part inventory write-offs totaling $1.3 million, increased personnel costs of $1.9 million, and an inventory draw contributing $3.3 million due to increased sales in the second quarter of 2019.

Non-GAAP Reconciliations

Reconciliation of Net Loss to EBITDA ~~and Adjusted EBITDA~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2019 2018 2019 2018
Net loss $ (22,976 ) $ (13,146 ) $ (10,087 ) $ (48,656 )
Add:
Interest expense, net 15,621
15,693
46,870
47,080
Income tax expense (benefit) 12
12
(88 ) (6 )
Depreciation and amortization 18,418
16,035
60,032
52,866
EBITDA $ 11,075
$ 18,594
$ 96,727
$ 51,284
Add:
Turnaround expenses 6,805
—
6,956
6,405
Adjusted EBITDA $ 17,880
$ 18,594
$ 103,683
$ 57,689


	Three Months Ended March 31,
(in thousands)	2020		2019
Net loss	$	(20,735)	$	(6,079)
Add:
Interest expense, net	15,783		15,650
Income tax expense (benefit)	7		(112)
Depreciation and amortization	15,597		16,584
EBITDA	$	10,652	$	26,043

~~September 30, 2019~~March 31, 2020 | 2726

Table of Contents

Reconciliation of Net Cash Provided By Operating Activities to EBITDA


	Three Months Ended March 31,
(in thousands)	2020		2019
Net cash provided by operating activities	$	27,707	$	51,924
Add:
Interest expense, net	15,783		15,650
Income tax expense (benefit)	7		(112)
Change in assets and liabilities	(32,060)		(39,099)
Other non-cash adjustments	(785)		(2,320)
EBITDA	$	10,652	$	26,043

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2019 2018 2019 2018
Net cash provided by operating activities $ 33,991
$ 39,588
$ 68,672
$ 27,118
Add:
Interest expense, net 15,621
15,693
46,870
47,080
Income tax expense (benefit) 12
12
(88 ) (6 )
Change in assets and liabilities (34,649 ) (34,615 ) (10,501 ) (17,573 )
Other non-cash adjustments (3,900 ) (2,084 ) (8,226 ) (5,335 )
EBITDA $ 11,075
$ 18,594
$ 96,727
$ 51,284

Reconciliation of ~~Adjusted~~ EBITDA to Available Cash for Distribution


	Three Months Ended March 31,
(in thousands)	2020		2019
EBITDA	$	10,652	$	26,043
Current reserves for amounts related to:
Debt service	(14,999)		(14,827)
Maintenance capital expenditures	(4,139)		(3,367)




Other:

Release of previously established cash reserves	2,567		—
Available Cash for distribution (1) (2)	$	(5,919)	$	7,849



Common units outstanding	113,283		113,283

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands) 2019 2018 2019 2018
Adjusted EBITDA $ 17,880
$ 18,594
$ 103,683
$ 57,689
Current reserves for amounts related to:
Debt service (14,833 ) (14,873 ) (44,525 ) (44,664 )
Maintenance capital expenditures (6,594 ) (4,526 ) (11,409 ) (10,894 )
Turnaround expenses (6,805 ) —
(6,956 ) (6,405 )
Other:
Future cash reserves —
—
(28,000 ) —
Release of previously established cash reserves 18,399
675
18,399
—
Available Cash for distribution (1) (2) $ 8,047
$ (130 ) $ 31,192
$ (4,274 )

Common units outstanding 113,283
113,283
113,283
113,283

(1)Amount represents the cumulative available cash based on year-to-date results. However, available cash for distribution is calculated quarterly, with distributions (if any) being paid in the period following declaration.


~~(1)~~	Amount represents the cumulative Available Cash based on quarter-to-date and year-to-date results, respectively. Available Cash for distribution is calculated quarterly, with distributions (if any) being paid in the following period.


~~(2)~~	~~The Partnership declared and paid cash distributions totaling $0.21 per common unit related to the first two quarters of 2019 for a total of $23.8 million.~~

(2)The Partnership paid no cash distributions for the fourth quarter of 2019.

Liquidity and Capital Resources

Our principal source of liquidity has historically been 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.

The effects of the COVID-19 pandemic have resulted in a significant and swift reduction in U.S. economic activity. These effects have caused significant volatility and disruption of the financial markets and may ultimately have an adverse impact on our financial performance and demand for our products. This period of extreme economic disruption, including business closures in the restaurant and food supply industries, idling of ethanol facilities, and limitations on the availability of the workforce, including farmers in the agricultural industry, may have an impact on our business, results of operations, and access to sources of liquidity. In view of the uncertainty of the depth and extent of the contraction in the U.S. economy and potential impact on the demand for our fertilizer products, we have taken proactive actions to address the impacts we may experience in our results of operations, liquidity, and financial condition, including the following:

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

•A reduction in the amount of expected maintenance capital expenditures for the remainder of 2020 to only include those projects which are critical to continuing safe and reliable operations, or are required to support future activities.

March 31, 2020 | 27

Table of Contents

When paired with the actions outlined above, we believe that our cash from operations and existing cash and cash equivalents, along with borrowings, as necessary, under the AB Credit Facility, will be sufficient to satisfy anticipated cash requirements associated with our existing operations for at least the next 12 months. However, our future capital expenditures and other cash requirements could be higher than we currently expect as a result of various factors. Additionally, our ability to generate sufficient cash from our operating activities and secure additional financing depends on our future performance, which is subject to general economic, political, financial, competitive, and other factors, some of which may be beyond our control.

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 otherwise refinance our existing debt. 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.

~~September 30, 2019 |~~ 28

~~Table of Contents~~

There have been no material changes in liquidity ~~for the three months ended September 30, 2019.~~from our 2019 Form 10-K. The Partnership, ~~was~~and its subsidiaries, were in compliance with all covenants under ~~its~~their respective debt instruments as of ~~September 30, 2019.~~March 31, 2020.

Cash and Other Liquidity

As of ~~September 30, 2019,~~March 31, 2020, we had cash and cash equivalents of ~~$83.7~~$58.0 million, including ~~$16.0~~$36.6 million from customer advances. Combined with ~~$47.5~~$49.6 million available under our AB Credit Facility less $25.0 million in cash included in our borrowing base, we had total liquidity of ~~$106.2~~$82.6 million as of ~~September 30, 2019.~~March 31, 2020.

Debt, including current maturities September 30, 2019 December 31, 2018
(in thousands)
9.25% Senior Notes due 2023 $ 645,000
$ 645,000
6.50% Senior Notes due 2021 2,240
2,240
Unamortized discount and debt issuance costs (15,720 ) (18,251 )
Total debt $ 631,520
$ 628,989


	March 31, 2020		December 31, 2019
(in thousands)
9.25% Senior Notes due 2023	$	645,000	$	645,000
6.50% Senior Notes due 2021	2,240		2,240
Unamortized discount and debt issuance costs	(13,925)		(14,834)
Total debt	$	633,315	$	632,406

~~AB Credit Facility -~~

The Partnership has the 2023 Senior Notes, the 6.50% Senior Notes due 2021, and an AB Credit Facility, the proceeds of which may be used to fund working capital, capital expenditures, and for other general corporate purposes. ~~The AB Credit Facility is a senior secured asset-based revolving credit facility with an aggregate principal amount of availability of up~~Refer to $50 million with an incremental facility, which permits an increase in borrowings of up to $25 million in the aggregate subject to additional lender commitments and certain other conditions. The AB Credit Facility matures in September 2021.

~~2023 Notes -~~ ~~CVR Partners issued $645 million aggregate principal amount of 9.25% Senior Secured Notes due 2023 (the “2023 Notes”~~Note 5 (“Long-Term Debt”) in ~~2016. The 2023 Notes are guaranteed on a senior secured basis by all~~Part II, Item 8 of the ~~Partnership’s existing subsidiaries. On or after June 15,~~ 2019 we may on any one or more occasions, redeem all or part of the 2023 Notes at the redemption prices set forth below expressed as a percentage of the principal amount of the 2023 Notes plus accrued and unpaid interest to the applicable redemption date.Form 10-K for further discussion.

12-month period beginning June 15, Percentage
2019 104.625%
2020 102.313%
2021 and thereafter 100.000%

Upon the occurrence of certain change of control events as defined in the 2023 Indenture (including the sale of all or substantially all of the properties or assets of the Partnership and its subsidiaries taken as a whole), each holder of the 2023 Notes will have the right to require that the Partnership repurchase all or a portion of such holder’s 2023 Notes in cash at a purchase price equal to 101% of the aggregate principal amount thereof plus any accrued and unpaid interest to the date of repurchase.

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 ~~nine~~three months ended ~~September 30, 2019 and~~March 31, 2020, along with our estimated expenditures for ~~2019~~2020 are as follows:

Nine Months Ended September 30, Estimated full year
(in thousands) 2019 2019
Maintenance capital $ 10,763
$ 18,000 - 20,000
Growth capital 811
2,000 - 5,000
Total capital expenditures $ 11,574
$ 20,000 - 25,000


	Three Months Ended March 31,		Estimated full year
(in thousands)	2020		2020
Maintenance capital	$	4,139	$14,000 - 16,000
Growth capital	1,454		5,000 - 7,000
Total capital expenditures	$	5,593	$19,000 - 23,000

~~September 30, 2019 |~~ 29

~~Table~~In light of ~~Contents~~

the changing environment and proactive maintenance performed during several outages at the third-party owned and operated air separation unit at Coffeyville, we are moving our turnaround from the previously planned timeframe of the fall of 2020 to the summer of 2021. We will continue to monitor market conditions and make adjustments, if needed, to our current plans. Our estimated capital expenditures are subject to change due to unanticipated changes in the cost, scope and completion time for capital projects. For example, we may experience unexpected changes in labor or equipment costs necessary to comply with government regulations or to complete projects that sustain or improve the profitability of the ~~refineries or~~ nitrogen fertilizer plants. We may also accelerate or defer some capital expenditures from time to time. Capital spending is determined by the board of directors of the Partnership’s general partner.

On September 14, 2019, the East Dubuque facility began a major scheduled turnaround, which was completed in October. We have incurred $7.0 million in the nine months ended September 30, 2019 related to this turnaround and estimate total costsMarch 31, 2020 | 28

Table of ~~approximately $9.3 million, with the remaining costs to be incurred in the fourth quarter of 2019.~~Contents

Distributions to Unitholders

The current policy of the board of directors of the Partnership’s general partner is to distribute all Available Cash the Partnership generated on a quarterly basis. Available Cash for each quarter will be determined by the board of directors of the Partnership’s general partner following the end of such quarter. Available Cash for each quarter is calculated as Adjusted EBITDA reduced for cash needed for (i) debt service, (ii) maintenance capital expenditures, (iii) turnaround expenses, and, to the extent applicable, (iv) reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate, if any, 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 of directors of our general partner.

~~The following table presents distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, as of September 30, 2019.~~

Distributions, if any, including the payment, amount and timing thereof, are subject to change at the discretion of the board of directors of CVR Partners’ general partner. There were no distributions paid by the Partnership during the three months ended March 31, 2020 related to the fourth quarter of 2019, and no distributions were declared for the first quarter of 2020, as the board of directors determined there was no available cash for the quarter.

The following table presents distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, during 2019.


				Distributions Paid (in thousands)
Related Period	Date Paid	Distribution Per Common Unit		Public Unitholders		CVR Energy		Total
2018 - 4th Quarter	March 11, 2019	$	0.12	$	8,924	$	4,670	$	13,594
2019 - 1st Quarter	May 13, 2019	0.07		5,205		2,724		7,929
2019 - 2nd Quarter	August 12, 2019	0.14		10,411		5,449		15,860
2019 - 3rd Quarter	November 11, 2019	0.07		5,205		2,724		7,930
Total distributions		$	0.40	$	29,745	$	15,567	$	45,313

Capital Structure

Recent Developments

As disclosed in our Current Report on Form 8-K filed with the SEC on April 24, 2020, on April 20, 2020, the average closing price of our common units had fallen below $1.00 per unit over a 30 consecutive trading-day period, which is the minimum average unit price for continued listing on the NYSE under Section 802.01C of the NYSE Listing Company Manual. Under the NYSE’s rules, the Partnership has six months following receipt of this notification to regain compliance with the minimum unit price requirement. However, due to the unprecedented market-wide declines as a result of the ongoing spread of COVID-19, the Securities and Exchange Commission approved the NYSE’s request to toll the six month compliance period through and including June 30, 2020. As a result, the Partnership has until January 1, 2021 to regain compliance with this continued listing standard. Although the Partnership intends to pursue measures to cure the unit price non-compliance and return to compliance with the NYSE continued listing requirements in Section 802.01C of the NYSE Listed Company Manual, no assurance can be given that the Partnership will be able to regain compliance with the aforementioned listing requirement. Since the filing of our Form 8-K, our unit price has continued to trade under $1.00.

March 31, 2020 | 29

Table of Contents

Cash Flows

The following table sets forth our cash flows for the periods indicated below:

Nine Months Ended September 30,
(in thousands) 2019 2018 Change
Net cash flow provided by (used in):
Operating activities $ 68,672
$ 27,118
$ 41,554
Investing activities (9,398 ) (14,850 ) 5,452
Financing activities (37,383 ) —
(37,383 )
Net increase in cash and cash equivalents $ 21,891
$ 12,268
$ 9,623


	Three Months Ended March 31,
(in thousands)	2020		2019		Change
Net cash flow provided by (used in):
Operating activities	$	27,707	$	51,924	$	(24,217)
Investing activities	(6,662)		(3,500)		(3,162)
Financing activities	(25)		(13,594)		13,569
Net increase in cash and cash equivalents	$	21,020	$	34,830	$	(13,810)

~~September 30, 2019 |~~
30

~~Table of Contents~~

Cash Flows Provided by Operating Activities

The change in net cash flows from operating activities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 as compared to the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 is primarily due to ~~improved operating results leading to~~ a decline in net ~~loss~~income, excluding non-cash items, of ~~$10.1~~$17.2 million, unfavorable changes in ~~2019 compared to a net loss~~non-current assets and liabilities of ~~$48.7~~$1.4 million, and unfavorable changes in ~~2018.~~working capital of $5.6 million.

Cash Flows Used in Investing Activities

The change in net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, was primarily due to ~~decreased~~increased capital expenditures during ~~2019~~2020 of ~~$5.5~~$3.2 million.

Cash Flows Used in Financing Activities

The change in net cash used in financing activities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was the result of cash distributions ~~totaling $37.4 million~~paid as of the three months ended March 31, 2019 of $13.6 million. No distributions were paid during the ~~nine~~three months ended ~~September 30, 2019, compared to no distributions paid during 2018.~~March 31, 2020.

Off-Balance Sheet Arrangements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our market risks as of and for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 as compared to the risks discussed in Part II, Item 7A of our ~~2018~~2019 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of ~~September 30, 2019,~~March 31, 2020, we have evaluated, under the direction of our Executive Chairman, Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e). Based upon and as of the date of that evaluation, our Executive Chairman, Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Partnership’s management, including our Executive Chairman, Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer as appropriate, to allow timely decisions regarding required disclosure.

March 31, 2020 | 30

Table of Contents

Changes in Internal Control Over Financial Reporting

There have been no material changes in the Partnership’s internal controls over financial reporting required by Rule 13a-15 of the Exchange Act that occurred during the fiscal quarter ended ~~September 30, 2019~~March 31, 2020 that materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 11 (“Commitments and Contingencies”) to Part I, Item 1 of this Report, which is incorporated by reference into this Part II, Item 1, for a description of certain litigation, legal, and administrative proceedings and environmental matters.

~~September 30, 2019 |~~ 31

~~Table of Contents~~

Item 1A. Risk Factors

~~There have been no material changes to our~~The risk factors ~~as of and for~~below should be read in conjunction with the ~~three and nine months ended September 30, 2019 as compared to the risks~~risk factors previously discussed in Part I, Item 1A of our ~~2018~~2019 Form ~~10-K.~~10-K, which risk factors could also be affected by the potential effects of the outbreak of COVID-19 discussed below. Additional risks and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition, and/or results of operations.

The COVID-19 pandemic, and actions taken in response thereto, could materially adversely affect our business, operations, financial condition, and results of operations.

The COVID-19 pandemic and actions of governments and others in response thereto is negatively impacting worldwide economic and commercial activity and financial markets. The COVID-19 pandemic has also resulted in significant business and operational disruptions, including closures, supply chain disruptions, travel restrictions, stay-at-home orders, and limitations on the availability and effectiveness of the workforce. The full impact of the COVID-19 pandemic is unknown and is rapidly evolving. The extent to which the COVID-19 pandemic negatively impacts our business and operations, including the availability and pricing of feedstocks, will depend on the severity, location, and duration of the effects and spread of COVID-19, the actions undertaken by national, regional, and local governments and health officials to contain such virus or remedy its effects, and if, how quickly and to what extent economic conditions recover and normal business and operating conditions resume.

If we fail to regain or maintain compliance with the continued listing standards of the NYSE, which may result in delisting of our common units from the NYSE.

As disclosed in our Form 8-K filed with the SEC on April 24, 2020, on April 20, 2020, the average closing price of the Partnership’s common units fell below $1.00 per unit over a consecutive 30 trading-day period, which is the minimum average unit price for continued listing on the NYSE under Section 802.01C of the NYSE Listing Company Manual. While the Partnership is considering various options it may take in an effort to cure this deficiency and regain compliance, no assurance can be given that the Partnership will be able to regain compliance with the aforementioned listing requirement. If the Partnership fails to regain compliance, our common units will be subject to the NYSE’s suspension and delisting procedures. If the Partnership’s common units ultimately were to be delisted for any reason, such delisting could negatively impact the Partnership, by among other things, reducing the liquidity and market price of our common units, reducing the number of investors willing to hold or acquire our common units, and limiting our ability to issue securities or obtain financing in the future.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

See Note 1 (“Organization and Nature of Business”) to Part I, Item 1 of this Report, which is incorporated by reference into this Part II, Item 2, for a discussion of the Partnership’s Unit Repurchase Program.

Item 5. Other Information

~~On October 22, 2019, the Audit Committee~~None.

March 31, 2020 | 31

Table of CVR Energy and the Conflicts Committee of the Board of Directors of the general partner of CVR Partners each agreed to authorize the exchange of certain parcels of property owned by subsidiaries of CVR Energy with an equal number of parcels owned by subsidiaries of CVR Partners, all located in Coffeyville, Kansas (the “Property Swap”). This Property Swap will enable each such subsidiary to create a more usable contiguous parcel of land near its own operating footprint. The Partnership will account for this transaction in accordance with the ASC 805-50 guidance on transferring assets between entities under common control.Contents

Item 6. Exhibits


Exhibit		Exhibit Description


~~Exhibit~~31.1*		~~Exhibit Description~~

31.1*	Rule 13a-14(a)/15d-14(a) Certification of Executive Chairman.
31.2*		Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive Officer.
31.3*		Rule 13a-14(a)/15d-14(a) Certification of Executive Vice President and Chief Financial Officer.
31.4*		Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer and Corporate Controller.
32.1†		Section 1350 Certification of Executive Chairman, President and Chief Executive Officer, Executive Vice President and Chief Financial Officer, and the Chief Accounting Officer and Corporate Controller.
101*		The following financial information for CVR Partners, LP’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2019,~~March 31, 2020, formatted in XBRL (“Extensible Business Reporting Language”) includes: (1) Condensed Consolidated Balance Sheets (unaudited), (2) Condensed Consolidated Statements of Operations (unaudited), (3) Condensed Consolidated Statements of Partners’ Capital (unaudited), (4) Condensed Consolidated Statements of Cash Flows (unaudited) and (5) the Notes to Condensed Consolidated Financial Statements (unaudited), tagged in detail.


*	~~Filed herewith.~~


†	~~Furnished herewith.~~

*Filed herewith.

†Furnished herewith.

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, 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, its business or operations on the date hereof.

~~September 30, 2019~~March 31, 2020 | 32

Table of Contents

SIGNATURES

Pursuant to the requirements 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.

CVR Partners, LP

By:

CVR GP, LLC, its general partner

~~CVR Partners, LP~~

~~By:~~

~~CVR GP, LLC, its general partner~~

~~October 24, 2019~~May 7, 2020

By:

/s/ Tracy D. Jackson

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

~~October 24, 2019~~May 7, 2020

By:

/s/ Matthew W. Bley

Chief Accounting Officer and Corporate Controller

(Principal Accounting Officer)

~~September 30, 2019~~March 31, 2020 | 33


	Three Months Ended March 31,
(in thousands)	2020		2019
Sales to related parties (1)	$	540	$	2
Purchases from related parties (2)	5,938		8,985

	March 31, 2020		December 31, 2019
Prepaid expenses (3)	60		249
Due to related parties (4)	949		7,826



PART I. Financial Information			PART II. Other Information

Item 1.	Financial Statements	4	Item 1.	Legal Proceedings	31
	Condensed Consolidated Balance Sheets - September 30, 2019 and December 31, 2018 (unaudited)	4	Item 1A.	Risk Factors	31
	Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	5	Item 5.	Other Information	32
	Condensed Consolidated Statements of Partners’ Capital - Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	6	Item 6.	Exhibits	32
	Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2019 and 2018 (unaudited)	7	Signatures		33
	Notes to the Condensed Consolidated Financial Statements - September 30, 2019 (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31



(in thousands)	September 30, 2019		December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	83,667	$	61,776
Accounts receivable	14,909		61,662
Inventories	56,864		63,554
Prepaid expenses and other current assets	4,608		6,989
Total current assets	160,048		193,981
Property, plant, and equipment, net	964,502		1,015,240
Goodwill	40,969		40,969
Other long-term assets	14,803		4,198
Total assets	$	1,180,322	$	1,254,388
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable	$	29,389	$	26,789
Accounts payable to affiliates	2,131		2,976
Deferred revenue	16,448		68,804
Other current liabilities	36,687		24,066
Total current liabilities	84,655		122,635
Long-term debt	631,520		628,989
Other long-term liabilities	11,791		2,938
Total long-term liabilities	643,311		631,927
Commitments and contingencies (see Note 11)
Partners’ capital:
Common unitholders, 113,282,973 units issued and outstanding at September 30, 2019 and December 31, 2018	452,355		499,825
General partner interest	1		1
Total partners’ capital	452,356		499,826
Total liabilities and partners’ capital	$	1,180,322	$	1,254,388



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except unit data)	2019			2018			2019			2018
Net sales	$	88,582		$	79,909		$	318,115		$	252,965
Operating costs and expenses:
Cost of materials and other	21,617			19,590			71,347			61,198
Direct operating expenses (exclusive of depreciation and amortization)	47,554			35,334			128,004			121,468
Depreciation and amortization	18,418			16,035			60,032			52,866
Cost of sales	87,589			70,959			259,383			235,532
Selling, general and administrative expenses	6,326			6,393			19,637			18,955
Loss on asset disposals	2,184			28			2,629			160
Operating (loss) income	(7,517		)	2,529			36,466			(1,682		)
Other (expense) income:
Interest expense, net	(15,621		)	(15,693		)	(46,870		)	(47,080		)
Other income, net	174			30			229			100
Net loss before income taxes	(22,964		)	(13,134		)	(10,175		)	(48,662		)
Income tax expense (benefit)	12			12			(88		)	(6		)
Net loss	$	(22,976	)	$	(13,146	)	$	(10,087	)	$	(48,656	)

Basic and diluted loss per unit data	$	(0.20	)	$	(0.12	)	$	(0.09	)	$	(0.43	)
Distributions declared per unit	$	0.14		$	—		$	0.33		$	—

Weighted-average common units outstanding:
Basic and Diluted	113,283			113,283			113,283			113,283



	Nine Months Ended September 30,
(in thousands)	2019			2018
Cash flows from operating activities:
Net loss	$	(10,087	)	$	(48,656	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	60,032			52,866
Share-based compensation	2,970			2,695
Other adjustments	5,256			2,640
Change in assets and liabilities:
Current assets and liabilities	9,283			16,490
Non-current assets and liabilities	1,218			1,083
Net cash provided by operating activities	68,672			27,118
Cash flows from investing activities:
Capital expenditures	(9,487		)	(15,022		)
Proceeds from sale of assets	89			172
Net cash used in investing activities	(9,398		)	(14,850		)
Cash flows from financing activities:
Cash distributions to common unitholders - Affiliates	(12,843		)	—
Cash distributions to common unitholders - Non-affiliates	(24,540		)	—
Net cash used in financing activities	(37,383		)	—
Net increase in cash and cash equivalents	21,891			12,268
Cash and cash equivalents, beginning of period	61,776			49,173
Cash and cash equivalents, end of period	$	83,667		$	61,441



(in thousands)	December 31, 2018 As Stated		Effect of Adoption of Topic 842 - Leases (Unaudited)				January 1, 2019 As Adjusted
Current assets:
Prepaid expenses and other current assets	$	6,989	$	(2,650	)	(1)	$	4,339
Total currents assets	193,981		(2,650		)		191,331
Other long-term assets	4,198		16,923			(2)	21,121
Total assets	$	1,254,388	$	14,273			$	1,268,661
Current liabilities:
Other current liabilities	$	24,066	$	3,462		(3)	$	27,528
Total current liabilities	122,635		3,462				126,097
Long-term liabilities:
Other long-term liabilities	2,938		10,811			(3)	13,749
Total long-term liabilities	631,927		10,811				642,738
Equity:
Total liabilities and partners’ capital	$	1,254,388	$	14,273			$	1,268,661



(in thousands)	January 1, 2019 (initial recognition)
Railcar leases	$	14,255
Real Estate and other leases	18
Total ROU assets	$	14,273



(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease expense	$	1,023	$	3,069
Financing lease expense:
Amortization of ROU asset	$	25	$	297
Interest expense on lease liability	2		17



(in thousands)	Total Capacity		Amount Borrowed as of September 30, 2019		Outstanding Letters of Credit		Available Capacity as of September 30, 2019		Maturity Date
Asset Based (“AB”) Credit Facility (2)	$	47,517	$	—	$	—	$	47,517	September 30, 2021


~~(1)~~	~~The lease standard was adopted on January 1, 2019 on a prospective basis. Therefore only 2019 disclosures are applicable to be included within the table above.~~



(in thousands)	Related Party	September 30, 2019		December 31, 2018
Prepaid expenses and other current assets
Feedstock and Shared Services Agreement	CRRM (1)	$	128	$	—

Accounts payable to affiliates
Feedstock and Shared Services Agreement	CRRM (1)	$	681	$	1,106
Hydrogen Purchase and Sale Agreement and other	CRRM (1)	348		324
Coke Supply Agreement	CRRM (1)	132		138
Services Agreement	CVR GP	970		1,372

Other current liabilities
Limited Partnership Agreement	CVR GP	$	1,697	$	1,179
Services Agreement	CVR Energy	3,009		2,352

Other long-term liabilities
Limited Partnership Agreement	CVR Energy	$	530	$	503


~~(1)~~	~~Coffeyville Resources Refining & Marketing, LLC, an indirect, wholly-owned subsidiary of CVR Energy~~



				Dividends Paid (in thousands)
Related Period	Date Paid	Dividend Per Common Unit		Unitholders		CVR Energy		Total
2018 - 4th Quarter	March 11, 2019	$	0.12	$	8,924	$	4,670	$	13,594
2019 - 1st Quarter	May 13, 2019	0.07		5,205		2,724		7,929
2019 - 2nd Quarter	August 12, 2019	0.14		10,411		5,449		15,860
Total		$	0.33	$	24,540	$	12,843	$	37,383



Debt, including current maturities	September 30, 2019			December 31, 2018
(in thousands)	September 30, 2019			December 31, 2018
9.25% Senior Notes due 2023	$	645,000		$	645,000
6.50% Senior Notes due 2021	2,240			2,240
Unamortized discount and debt issuance costs	(15,720		)	(18,251		)
Total debt	$	631,520		$	628,989



12-month period beginning June 15,	Percentage
2019	104.625%
2020	102.313%
2021 and thereafter	100.000%